Petty Cash Book: Definition, Format, Types & Operation

However, it might still be a helpful tool to document businesses in places where they do not use contemporary technology. The sum of money so kept in hand generally termed as petty cash and book in which the petty cash expenditures are recorded is termed as petty cash book. A cash book is set up as a subsidiary to the general ledger in which all cash transactions made during an accounting period are recorded in chronological order. It is also much faster to access cash information in a cash book than by following the cash through a ledger.

We can perform numerous operations on our datasets using excel tools and features. There are many default Excel Functions that we can use to create formulas. Many educational institutions and business companies use excel files to store valuable data. Almost all business organizations keep their monetary transaction records in excel worksheets. But creating the excel template with the required formats can be a complicated task for someone who isn’t used to excel.

Disadvantages of petty cash book

If they record petty expenses in the main cash book, then both the chief cashier and the main cash book will be overburdened. Payments that use the moneyNow, the petty cashier can use the money for day-to-day expenses that are allowed by the company. For example, the management can set a maximum amount that can be spent, limit spending on certain things or activities, etc.

At the end of a period totals of all heads of petty expenses are transferred to a relevant ledger account. Under this imprest system of petty cash book, the head cashier provides a fixed amount of money to the petty cashier in advance for meeting expenditure of a particular period. The cash allocated for petty expenditures for a specific period is entered on the credit side of general cash book and on the debit side of petty cash book. When a petty cashier needs money, the main cashier gives them a cheque.

This transactions are not directly recorded in the main cash book for they are many in a day and are small in nature. Therefore, a special ledger account is introduced in the main cash book system, commonly known as a petty cash book. Credit side consists of more analysis

columns in the petty cash book. Under imprest system, a fixed amount of money known as float is given to the petty cashier to meet petty expenditures for an agreed period which usually consists of a week or month. At the end of agreed period, the petty cashier submits the details of all expenditures incurred by him to the chief cashier.

Best practices for petty cash management

Here, the debit and credit sides are subdivided into separate columns for Cash and Bank. The cash column denotes the money you have in your hands, like the actual cash you hold. The bank column represents the money you deposit or withdraw from your bank account. A petty cash book is an account or record of all petty cash expenses of your business.

A petty cash book is generally maintained on a columnar basis – a separate column being allotted for each type of expenditure. 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. Every payment made by the petty cashier is entered on this side twice – Firstly it is recorded in the total column and then to the appropriate column to which the expense is concerned. The total of the “total column” will naturally agree with the total of all subsidiary columns.

What are the types of petty cash books?

Also, it will facilitate the accountant or the organization to evaluate the expenses under the dissimilar various heads. All petty payments are to be classified into different heads and different columns are maintained. It has just one column each for debit and credit for writing down all the cash transactions. On the debit side, a firm can record any cash that it has at the beginning of the month or any income it receives. Small businesses often use this type of cash book to record and track cash inflow and outflow.

• Particularly in the case of small transactions, it is often challenging to keep a track record of all the expenses that have been incurred.
• The petty bookkeeper collects money in exchange for the bank’s check and enters the check-in the PCB’s payments column.
• The chief accountant also evaluates the petty cash book at regular intervals, so there is no chance of accounting errors or mistakes passing through the system.
• This article will show you the step-by-step procedures to create a Petty Cash Book Format in Excel.
• Business organizations have to pay for things like office supplies, postage stamps, transportation, etc., that cannot be paid for by check.

Along with columns for cash and bank, it includes a third column for writing down the discounts. The discount column shows the amount of discount paid or received on any cash or bank transaction. This is a certain amount allotted by the company for making petty expenses for a specific period of time. All daily expenses and some other insignificant expenses are counted under the petty cash book. Maintaining a petty cash book using any of the above-mentioned systems has one crucial step — regular auditing and rechecking. The petty cashier has to submit the expense record at regular intervals.

So, for example, the petty expenses categories of your business are refreshments, bus tickets, office stationery, postage, and other miscellaneous expenses. Along with this, another great benefit of the imprest petty cash system is no cash misuse. The petty cashier is not allowed to store or hold back any residual amount if left from the given budget. statement of retained earnings You might think that petty expenses are of small amounts and can be made on the go; why do you have to account for those as well? This is because these expenses can add up and become huge, and managing it afterward can be extremely tricky. The petty cashier is to use a printed payment receipt containing a serial number for cash head of expenditure.

Examples of Cash Book Format

At the end of the period, the petty cashier submits the statements covering petty expenditures to the chief cashier. A petty cash book is kept to keep track of tiny expenses like stamps, letterhead, and communications. It should also be kept in mind that petty cash book is not like the cash book.

• The petty cashier of ABC Company paid cash for the following expenditures during January 2021.
• Imprest system involves setting of a specific amount of cash to be used by the petty cashier within a specific period of time.
• It includes payments for various expenses such as salaries, utilities, suppliers, and other operating costs.
• The petty cashier has an absolute responsibility of managing certain amount of cash.
• A double-column cashbook is a better and more detailed version of a single-entry book.

The petty cash book will be maintained by a

separate cashier known as petty cashier in the accounting field. A PCB is a manual process for keeping track of expenses that is frequently rife with mistakes. Additionally, particularly in big businesses, keeping the accounts and recording every transaction can become tedious. To combat this, several businesses are abandoning the outdated bookkeeping methodology. To sum up, we may say that the petty cash book of documenting has become less significant over the period.

Similarly, payment is restricted out of this fund for some heads of expenditure such as payment of the short-term loan to employees. The head cashier pays him again $400 for meeting expenditure of February. 2.Not suitable for the large organizations which have many transactions. It includes expenses incurred for purchasing materials such as paper, ink, pencil, eraser, carbon paper and other items of stationery.

The credit side contains many money columns as per requirement for recording expenses and the expenses are recorded in a classified way in chronological order of dates. Small or large companies maintain 2 types of Petty Cash Book for all cash transactions of a business. Two types of Petty Cash Book maintained by small or large companies for easy, quick and accurate recording of all cash transactions. If the management is not careful, the main cashier’s assignments will be the same as the petty cashier’s assignment for the number of the transactions are few and may require one cashier. A petty cash is a cash book used to enter all small or petty expenses obtained.

An analytical petty cash book is the most effective way to record petty cash payments. A separate column is assigned for each petty expense on the credit side. Whenever a petty expense is recorded in the total payment column, the same amount is recorded in the relevant petty expense column. These credits can be for such transactions as payments for meals, flowers, office supplies, stamps, and so forth. Petty cash transactions are unique transactions for they involve dismal amounts of money. It refers to small day to day transactions that the organization undertake.