Petty cash book supplies information regarding petty payments made on different heads more easily and quickly. A separate column is allotted for each type of expenditure. Cash book contains cash transactions passing into and out of a business. 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.
A double column cash book or two column cash book is one which consists of two separate columns on the debit side as well as credit side for recording cash and discount. Meaning of petty cash book, its importance and advantages. 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. New details have emerged on the methods used and the outcomes following the case of 47yearold convicted embezzler sujata sue sachdeva, who was the trusted 15year veteran vice president of finance, secretary, and principal accounting officer of koss corporation. Employees take money from the petty cash account, recording each transaction with date, amount, vendor who was paid, and business purpose.
Columnar petty cash book and its preparation process. Adams petty cash 2part carbonless receipts book, 2. The interesting part is that petty cash is the very first account in the chart of accounts. How an embezzler stole millions from a small company. Separate account records are maintained for petty cash, accounts payable and receivable, and other relevant transactions such as inventory. The ruling of analytical petty cashbook is given below. Petty cash vouchers are also referred to as petty cash receipts and can be purchased from office supply stores the petty cash voucher should provide space for the following. The petty cashier of john and james company paid cash for the following expenditures during march 2018.
During a span of more than five years, she stole nearly half the company. Imprest system of petty cash is a system where the petty cashier is given a lump sum in cash often called a float keeping in view the possible needs of the business to meet its petty expenses for a stated period, e. Yet another variation on the petty cash book is to maintain it as a spreadsheet, where each item is recorded in a specific column that is. The date of transaction is written in this column in two linesin the first line, the year and in the second line, the name of. Petty cash, also known as cash on hand, refers to small amounts of cash kept on hand in a business.
Single entry bookkeeping is an easy way to step yourself into accounting. It uses columns to organize different uses of cash for your business. Just click the start quiz button and start cash book mcqs quiz. Maintaining a cash book under the stated system is called an imprest petty cash book. An example of this format, using the same information as the preceding example, is as follows. It is another cash book which is maintained, generally, in large business. The petty cash book will be maintained by a separate cashier known as petty cashier in the accounting field. Meaning, imprest system and its advantages differences between cash book and cash flow statement.
It is an accessible, convenient way to pay for small purchases. Every time a payment is made through petty cash, it is recorded in the petty cash register usually by the cashier. Record transactions with the singleentry system in a cash book. These small expenditures are usually paid using coins and currency notes rather than checks. Two column cash book or double column cash book definition with explanation and format with examples are disscused here. Petty cash book 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.
At the end of the period a petty cash reconciliation is carried out. Petty cash book is the cash book which involves small cash payment and receipt during daily business operation. Cash received by the petty cashier is recorded on debit side and all payments for petty expenses are recorded on credit side in one column. In almost all businesses, it is found necessary to keep small sums of ready money with the cashier or petty cashier for the purpose of. Yet another variation on the petty cash book is to maintain it as a spreadsheet, where each item is recorded in a specific column that is designated for a particular type of receipt or expense. Petty cash book maintains records of all petty payments systematically. Variation on the petty cash book is to maintain it as a spreadsheet, where each item is recorded in a specific column that is designated for a particular type of receipt or expense. Petty cash transaction a petty cash transaction is one in which an employee or business owner takes money out of the petty cash fund for the purpose of buying something for the business.
They have a cash book which is both a book of prime entry as well as part of the double entry bookkeeping system. Candidates were required to prepare a petty cash book, make ledger postings and to answer related theory. They are there just to explain the purpose of the expenditure. This journal entry should also be used when petty cash is replenished. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Take a quick multiple choice questions mcqs test about cash book. Cash book columns track key information about your finances. Cash book serves the purpose of journal and ledger. There might be a petty cash drawer or box in each department for. Petty cash book definition, types, format, examples. An explanation of the types of funds managed by municipalities and the types of records found. Petty cash book explanation, format, example, ordinary. Part a required candidates to explain one reason for maintaining a petty cash book. The cash book is a chronological record of the receipts and payments transactions for a business.
If you find difficulty in answering these questions, read cash book chapter thoroughly from explanation section of the. Importance and advantages of petty cash book business performing a large number of petty transactions usually maintain a separate petty cash book. Since only cash transactions are recorded in the cash book it is a special journal. This method of bookkeeping is a simple record of income and expenses using a manual cash book and calculator, or a spreadsheet in a selfcalculating program such as open office, microsoft excel or quattro pro. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure.
Petty cash book makes possible for making comparison of the petty expenses between two periods and helps in controlling such petty expenses more effectively. A petty cash fund is an amount of cash that a business uses to make small, miscellaneous purchases. This first article focuses on understanding the cash book. Below you will find all the cambridge international examinations igcse accounts 0452 past paper questions categorized into topics. What is the importance of petty cash in a business. Under the system, the petty cash fund balance is always maintained at a fixed amount decided on when the fund is first established during an accounting period petty cash is used to pay cash expenses which are supported by petty cash vouchers. C or cb cash book, j journal, pc petty cash book etc. These mcqs can help you to prepare for your exams, interviews and different tests. The balance of cash book always means cash in hand. A cash book is a financial journal in which cash receipts and payments including bank deposits and withdrawals are recorded first in a chronological order ie recorded according to the date of transaction. Generate the cash book report p74r0050 oracle docs. Petty cash book format example definition explanation.
Simple petty cash book is just like the main cash book. 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 set up a petty cash system, the initial amount of money comes from the business checking account. 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. A petty cash is a cash book used to enter all small or petty expenses obtained. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and.
A 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. Enter the transaction on the debit or credit side and it will automatically calculate the cash on hand for you. Definition and explanation of cash book with examples. Petty cash balance after reimbursement reverts to back to the level of the float. Petty cash is an easy to understand and familiar method of paying for company expenses. 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. The primary bookkeeping record in singleentry bookkeeping is the cash book, which is similar to a checking account register in uk. Before explaining the four variations of petty cash, ill explain the account structure used with bookkeeping. A petty cash voucher is usually a small form that is used to document a disbursement payment from a petty cash fund. Petty cash book elearning, etutoring, school education support. All these sums are listed as a debit on the left side of the accounting ledger. Download cash book excel template 5 types of cash book templates with predefined formulas to help you record routine cash transactions of a company regularly. This is the column where you should record cash received and cash paid out. Accounting for petty cash explanation, related controls.
At monthend, expense receipts can be summed and grouped into expense categories. 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. A book in which non cash sales are recorded with details of customer, invoice, amount and date. The imprest petty cash system is a method of accounting for petty cash expenses. This is used to record any cash received after which it is posted in the cash column in the cash book. There are two types of cashbooks, and they are the 2column cash book and the 3column cashbook. Advantages of petty cash book are burden of main cash book keeper is reduced, helps in. A cash book is a larger version of a check register. Balance of cash book and cash of a cash box must be equal. The following points highlight the importance and advantages of petty cash book which can be taken as its objectives as well. 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.
By watching this video you will understand how to record all the entries into the. When a business doesnt provide access to company credit cards, or employees would rather not wait to be reimbursed for purchases, using petty cash is a simple alternative. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. 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 an initial petty cash account is set up, a journal entry should debit the petty cash account and credit cash. Analytical and imprest system of petty cash book your article library. The account structure is built using the chart of accounts function in the accounting software. The credit side consists of several analysis columns. The differences between his cash book and bank statement balances at 30 april are. Understand how to make all the necessary entries in to the petty cash book. This format makes it easier to record petty cash activity in the general ledger. You use the cash book report to reconcile the petty cash issue and petty cash receipt documents. And its cheap because you do not have to invest in bookkeeping software. The clearing account balance is the total of wages, workers comp, employer taxes and payroll fees all monies involved in the dispensing of wages.
Cash book contains all cash receipts and payments, including bank deposits and withdrawals. General cash book is subdivided in the single column, double column, and treble column cash book. For this purpose, a petty cashier is appointed by the chief 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. To pay for small purchases which require cash, such as food for the office lunch or coffee supplies, or for parking. This is the second part of our look at the topic of transferring data from a cash book. Sample petty cash book running balance yet another variation on the petty cash book is to maintain it as a spreadsheet, where each item is recorded in a specific column that is designated for a particular type of receipt or expense. A sales book is also known as sales day book is a book of prime entry in which are recorded the.74 877 552 1130 254 1188 659 1063 665 418 1115 806 101 42 947 514 211 1458 1012 742 1394 1404 1579 1289 509 1242 985 1444 1550 1230 761 1200 556 626 211 1057 804 410 1497 1087 533 810 701 924 538 71 1320