Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque, because of the inconvenience and costs of writing, signing, and then cashing the cheque the most common way of accounting for petty cash expenditures is to use the imprest system. The initial fund would be created by issuing a cheque for. 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. To avoid this a petty cash book is maintaining by firms by the petty cashier. In almost all businesses, it is found necessary to keep small sums of. From basic office supplies, such as printer paper and labels, to office equipment, like file cabinets and stylish office furniture, office depot and officemax have the office products you need to get the job done.
Guildhall account pad 8 summary column 298mm x 210mm 60 sheet punched 1589. Subsidiary ledgers are often maintained to facilitate a division of responsibilities within a large account, or to provide a separate record of a particular account. Cash book also functions as a ledger account as it has both the debit and the credit sides. Petty cash book and types of petty cash book part 1 simple. It also saves time posting each item of petty payments unnecessarily in the ledger. The debit column is used for entering the balance of cash in the hand of petty cashier at the beginning of the period and the amount received from the head cashier. Save on printer ink and toner to keep your office efficient and productive. Regularly checking the petty cash book is balanced when the money in the fund is low, they have to request that cash be withdrawn from the bank in order to replenish the money that has been paid out. Petty cash book definition the petty cash book is defined as relatively small amount of cash kept at hand for making quick payments for miscellaneous small expenses in the business concern. Keep petty cash purchases small, for expenses like postage, parking meters or party supplies.
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. Read this article to learn about the recording of transactions in cash book and journal. Petty cash is a small amount of cash on hand used for paying. The credit side consists of several analysis columns. Post the individual entries in the cash receipts book to the credit column of. In the main cash book all cash payments except payments of petty cash exps. These are expenses which are incurred day after day. The is only one money column on the debit side and all sum received from time to time by the petty cashier from the chief cashier are entered in it. Its also vital to ensure that you have a sturdy and lockable petty cash box where you keep all the money safe. If you let your workers dip in and out of your petty cash reserves, its wise to. Daily tasks of handling small cash transactions can be done by junior staff. Meaning of petty cash book, its importance and advantages. It is a system of petty cash book where a person is given a fixed amount in the beginning of the period, the petty cashier submits the account of.
This is because most businesses only use one or two of the petty cash variances as explained below. Simple petty cash book a simple petty cash book is one in which there is only one amount column on its both sides with common date and particular column. Imprest system of petty cash book the amount which the main cashier hands over to the petty cashier in order to meet the petty cash expenses of a given period is known as. If you let your workers dip in and out of your petty cash reserves, its wise to keep a close eye on whats coming in and. Keep the petty cash book and box or tin in a safe place, such as the accountants or managers office or cubicle. Recording of transactions ii petty cash book solutions. The analysed cash book free resources for acca and cima students free acca and cima on line courses free acca, cima, fia notes, lectures, tests and forums. Range of cash books, petty cash pads, receipt books and. Petty cash book may be treated either as a part of the double entry system or merely as a memoranda book. It means that they had not listed the balance in the trial balance, and they should have done it is obviously a debit.
We have one bank account but we utilise 2 cash book viz. Recording of transaction in cash book and journal with. Understand how to make all the necessary entries in to the petty cash book. 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. 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. Cash book records all receipts of and payments in cash. The additional analysis columns are used to analyze expenditures as they arise. Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque, because of the inconvenience and costs of writing, signing, and then cashing the cheque. Petty cash book saves time because each payment under particular head is not. This type of cash book will allow managementproprietors to tell at a glance the total amount spent on each of these common expenses. A general ledger, however, comprises all accounts necessary for the compilation of the finance statements required by the. Petty cash book is a formal summarization of petty cash expenditures, sorted by date. As only totals of various columns are to be posted in the. When the petty cashier needs further cash, he makes up the petty cash book and presents it to the chief cashier, who verifies the accounts and gives further amount.
Petty cash book format example definition explanation. The petty cash reconciliation balances with the petty cash control. 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. There are numerous small payments on account of expenses like stationery, cartage, coolie hire, refreshments to guests etc. A cash book is a type of subsidiary book where cash or bank receipts and cash or bank payments made during a period are recorded in a chronological order. In this video we will discuss what is petty cash book a subsidiary books in hindi for class 11th cbse icse and state boards and what are the different types of petty cash book i.
These small expenditures are usually paid using coins and currency notes rather than checks. It is a system of petty cash book where a person is given a fixed amount in the beginning of the period, the petty cashier submits the account of expenses keeping surplus amount himself. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. Investigate any differences between the stated amount of the petty cash fund and the actual total of cash and vouchers. This may indicate that more money is necessary to complete a. There are two primary types of entries in the petty cash book, which are a debit to record cash received. If the former course is adopted, each payment to petty cashier is shown on the credit side of the main cash book which is considered to have been balanced by a debit entry in the petty cash book. Jul 02, 2018 in this video we will discuss what is petty cash book a subsidiary books in hindi for class 11th cbse icse and state boards and what are the different types of petty cash book i. Petty cash book explanation, format, example, ordinary and. Petty cash book helps in making the main cash book more informative, clean and clear by including only major transactions. Totals are carried forward from page to page until the end of the periods. Use a previous budget variance analysis to determine if a variance is occurring in each period. For this purpose, a petty cashier is appointed by the chief cashier.
Recording of transactions ii petty cash book solutions this page contains the cbse accountancy class 11 chapter recording of transactions ii notes. Notes on systems of petty cash fund grade 10 accountancy. To help you understand the cash book concept, i strongly recommend that you click on the link below to read a summary on one, two and. 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. 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. Cash mandates the custodian is responsible for controlling and safeguarding the petty cash account. The cashier maintaining the petty cash book is called petty cashier. With the help of cash book cash and bank balance can be checked at my point of time. Petty cash book explanation, format, example, ordinary. The cash book and 8 the petty cash book ethaksalawa. Petty cash book helps in making the records of cash transactions uptodate because of division of labor in recording cash transactions.
What is petty cash book petty cash book records small cash payments. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Dual function of the cash book cash book functions as a prime entry book as business records the receipts and payments of cash at. This type of petty cash book is known as analytical petty cash book. A cash book with cash, bank and discount column is commonly referred as. Adams petty cash 2part carbonless receipts book, 2. Aug 03, 2016 petty cash book home forums ask acca tutor forums ask the tutor acca fa fia ffa petty cash book this topic has 1 reply, 2 voices, and was last updated 3 years, 8 months ago by john moffat. C or cb cash book, j journal, pc petty cash book etc. In a business operating this type of cash book, small cash payments are usually made out of petty cash. Entries are recorded just like a ledger account with the help of. The source document for this task is the cash receipts bank lodgement book. In addition to the box, purchase a receipt book that has at least two parts, one is a carbon copy of the primary receipt. This is so because, as explained later, subsequent checks drawn to replenish petty cash are not debited to petty cash account, but are charged directly to the various accounts for which the petty cash funds have been expended from this petty cash fund the cashier makes such payments as are necessary, recording each one in a book similar to that shown in form 4. Although there can be minor variances, when unbalanced, the source of the.
All our receipts and payments is made from the main cash book. If youre looking for solutions to other theoretical questions or other book related. Differences between main cash book and petty cash book 1. The analytical petty cash book and the imprest system. If a department demonstrates the need for more than one person to have access to petty cash, it should establish a new petty cash fund with a different custodian. By watching this video you will understand how to record all the entries into the receipts and payments sections of the.
The petty cash book is a formal summarization of petty cash expenditures, sorted by date. Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side. You can use this report to determine the current cash value of any money, regardless of the defined currency within the petty cash receptacles. This page contains solutions to simple cash book numerical questions for the chapter 4 recording of transactions ii. The petty cash book is ruled in the form of the single column cash book with an amount column and addition oat columns for the more usual classes of expenditure. Most businesses allow their employees access to a petty cash fund to make small purchases that would be a hassle to put through company accounts individually. You can find the questionsanswerssolutions for the chapter 4 of cbse class 11 accountancy in this page. Pack of 5 guildhall 127 x 102mm petty cash voucher pads in white 1569. So it is the cash book for petty or small expenses. Petty cash book explanation, format, example, ordinary and imprest. The book may be considered as the book of original entry or memorandum book. Do not leave it in a common area, such as the lunchroom or meeting area.
Cash book is a subsidiary book which records the receipts and payment of cash. Petty cash reconciliation in imbalance to detailed petty cash. Most cash should be deposited right away in the bank, but a small amount can be kept on hand in a petty cash account earmarked for minor. The result should match the starting balance of the account. Petty cash reconciliation in imbalance to detailed petty. Post the individual entries in the cash receipts book to the credit column of the customers account in the sales ledger. In module 12, which covered the bank cash book, the advantages of paying all cash and cheques into the bank intact were evident. We process the petty cash cheque on the main cash book and all petty cash payments is processed through the petty cash book. The most common way of accounting for petty cash expenditures is to use the imprest system. Cash book and the petty cash book on pastel partner v12. There might be a petty cash drawer or box in each department for. If treated as a part of double entry, then no separate petty cash account is needed. Imprest system of petty cash fund the world impress means advance amount which is personal to certain person to make petty expenses. Adams 2 part petty cash receipt book 5 12 x 11 book of 200.
All the receipts have a sequential number preprinted on them. In big business firms, all payments are made by cheques and all receipts are banked. Thus, the book is part of a manual recordkeeping system. The posting of the receipts from the cash receipts book is exactly the same as posting the sales and returns. 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. For free distribution 83 the following facts are discussed in this chapter. Uses of petty cash book its a cash book used to enter daily petty expenses. The petty cash report shows and overview of petty cash receptacles and their activities for the business date that you select. Imprest system of petty cash book the amount which the main cashier hands over to the petty cashier in order to meet.