The intent of this activity is to see if there have been any undocumented disbursements. Petty cash or the petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check. In most cases, the petty cash book is an actual ledger book, rather than a computer record. A petty cash book is a ledger kept with the petty cash fund to record amounts that are added to or subtracted from its balance. Petty cash book helps to keep the main cash book in a compact form because numerous entries for small and petty items are recorded in the petty cash book itself. The remaining cash, the checks, and payment cards should balance to the amount of the. A day bookcumledger kept for making entry of the cash transactions as well as posting to the cash and bank accounts is called cash book. The most important part of a petty cash system is the documentation of each transaction. General cash book is subdivided in the single column, double column, and treble column cash book. It also acts as a subsidiary book to post all the cash. How process transactions in the petty cash book for more go to to donate. The transactions which are done on credit are not recorded while preparing the double column cash book.
Meaning of petty cash book, its importance and advantages. You need to develop a set of policies or procedures dictating the handling of cash in your business to avoid problems such as theft and misappropriation. The strong spiral binding allows pages to lay flat while writing, and the white, canary paper sequence provides a copy of all payments received. Petty cash book explanation, format, example, ordinary and imprest. In preparing a bank reconciliation, the amount of a canceled check omitted from the journal is added to the balance per companys records. Read this article to learn about the recording of transactions in cash book and journal. A single column cash book always shows debit balance debit side exceeding credit side because more cash cannot be paid than what we have. Petty cash journal entries based on the following petty cash information, prepare a the journal entry to establish a petty cash fund and b the journal entry to replenish the petty cash fund. As employees use petty cash, they should keep a log of what expenses the petty cash was used for and how much was used. Petty expenses are recorded in petty cash book in chronological order of dates instead of the cash book.
Click here to download simple cash book excel template. When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Any petty cash should be deducted from the cash, if applicable. Petty cash book format example definition explanation.
Cash book records all receipts of and payments in cash. From the initiation of journal, the ledger account is prepared, with the help of which the final books of accounts of the company is prepared. Petty cash journal entries based on the following petty. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. This 2part carbonless book can be used to document the receipt of petty cash. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel, newspapers, cleaning, pins, and causal labor etc. When a trader keeps a bank account it becomes necessary to record the. For this purpose, a petty cashier is appointed by the chief cashier. Her transactions for the month of march 2015 were as follows.
A three column cash book or treble column cash book is one in which there are three columns on each side debit and credit side. Label the four resulting columns date, purchase, amount and balance. There are two primary types of entries in the petty cash book, which are a debit to record cash received by the petty cash clerk usually in a single block of cash at. The receipts are recorded in the dr side and the payments are recorded in the cr side of the cash book. In petty cash book, payments for petty items are recorded. Youll also want to purchase a lock box for the cash and receipts. Start a petty cash fund by writing a check drawn on your. Petty cash book is a formal book of recording petty expenses which are incurred in cash.
Youll need to nominate a petty cash manager, typically an accountant, bookkeeper or other supervisor to oversee operations and collect receipts, if necessary. Add a petty cash account to your chart of accounts if you do not already have one. In the case of double column cash book, cash column records all the transactions relating to cash so, it works as the cash accounts and the bank column records all the transactions relating to bank such as checks received, checks issued, etc so, it works as the bank accounts. Petty cash book definition, types, format, examples.
It is another cash book which is maintained, generally, in large business concerns to reduce the burden of main cash book, in which numerous transactions involving petty small amounts are recorded. Petty cash book can be maintained either in a simple or in analytical way. Most businesses use petty cash for this, monitoring payments in a petty cash book. How to prepare cash book and petty cash book youtube.
The amounts you record in your petty cash log and the balance you calculate each time you. Managing a petty cash account for your small business. The cash book is updated from original accounting source documents, and is therefore a book of prime entry and as such, can be classified as a special journal unlike other special journals such as the purchases journal or the sales journal, the cash ledger book records debit and credit entries. Keep the petty cash book and box or tin in a safe place, such as the accountants or managers office or cubicle. Keep petty cash purchases small, for expenses like postage, parking meters or party supplies.
Columnar petty cash book and its preparation process. Besides maintaining a main or general cash book, many companies also maintain a small cash book known as petty cash book to record small day to day expenditures of the business petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel, newspapers, cleaning, pins, and causal labor etc. There might be a petty cash drawer or box in each department for. Petty cash book is maintained by the petty cashier. Petty cash book is an accounting book used for recording expenses which are small and of little value, for example, stamps, postage and handling, stationery, carriage, daily wages, etc these are expenses which are incurred day after day. There are two primary types of entries in the petty cash b. On 1 march the bank column of his cash book showed a. Columnar petty cash book contains many money columns to record day to day expenditures. A separate column is allotted for each type of expenditure. Hence, the petty cash book is one in which all small items of expenses are recorded in a systematic manner made through petty cash fund. Cash book contains cash transactions passing into and out of a business.
If you have a larger smb, you may want to set up petty cash accounts for each of your divisions. Do not leave it in a common area, such as the lunchroom or meeting area. By keeping track of all petty cash transactions no matter how petty you have records to back up deductions for those small business expenses. The employee, who keeps the petty cash book, is called petty cashier. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. You may continue this throughout the notebook upon starting the petty cash book or rely on.
Thus, the book is part of a manual recordkeeping system. In past times, the cash book was a physical book with all the receipts manually recorded on the left hand side debit side and the payments manually recorded on the right hand side credit side, similar to the format shown below. How to post and balance off the aats 3column cash book. Your petty cash book allows you to record relevant information about. Read this article to learn about the following types of cash book and its preparation, i. Usually the deposits into bank accounts maintained by a business firm, withdrawals from such accounts and cheque payments are also recorded in the cash book. How to prepare petty cash bookpetty cash book in hindi. In simple petty cash book there is one column each for recording of receipt of cash from the. A petty cashier receives a fixed amount of money from the head cashier with which he meets petty expenses of a certain period and records in chronological order of dates in the petty cash book. There are the two methods of preparing petty cash book. Recording of transaction in cash book and journal with. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in.
Such disbursements are a common problem in petty cash, where there is a high risk of fraud. Each employee wishing to make a purchase should go through this representative, rather than leaving the. Petty cash book definition, types, format, examples imprest and. At times, every business finds it convenient to have small amounts of cash available for immediate payment of items such as delivery charges, postage stamps, taxi fares, supper money for employees working overtime, and other small items.
Petty cash book is maintained to record small expenses such as. Here are five easy steps and two tips you should take to set up a petty cash account for your small business. As the petty cashier has to account for his expenses, before he can draw further sums, the petty cash book remains up to date. These small expenditures are usually paid using coins and currency notes rather than checks. Format of the petty cash book bookkeeping debits and credits. It is another cash book which is maintained, generally, in large business. Petty cash reconciliation preparing and booking deposits to general ledger separation of duties.
Like a journal, it is the first book which records all the cash transactions of the business. How to prepare a petty cash book purchase information. Click here to download all accounting excel templates for rs 199. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel, newspapers, cleaning, pins, and causal. The difference between the total of the debit items and that of the total column on the credit represents the balance of the petty cash in hand. Meaning of petty cash book a petty cash book is one in which all petty or small payments made through petty cash fund are recorded systematically.
So, the book, wherein day to day petty expenses for a particular period of a business concern, are recorded in chronological order of dates is called petty cash book. A cash book is that unique book of accounts which fulfils the objective of both, a journal and a ledger. To account for petty cash, create a transaction log that covers the date, the person who used the petty cash, a description of the transaction, and any other deposits or expenses. The first row is for the company name and second for the title of the template. Preparing cheques, cheque payment vouchers, deposits, cash book, bank reconciliation, petty cash vouchers, timesheets, payroll and calculating nis, paye, vat, green fund and business levy. Rectification entries mistaken entries which are rectifyingcorrecting that entries. Petty cash is a system that funds and tracks small purchases such as parking meter fees that arent suitable for check or credit card payments. One is used to record cash transactions, the second is used to record bank transactions and third is used to record discount received and paid. After reading this article you will learn about the format of preparing cash book. Required a state one advantage of the imprest system of petty cash.