Petty Cash Book : Definition, Types, Format, Example

Petty Cash Book Definition

Lesser costs such as postal services, cardboard or telegraph are kept in the tiny cash book. For each kind of spending a distinct column is assigned. The difference between the total amount of debit items and the ‘total column’ is the balance of the little cash in hand.

Or 

The book that contains such tiny payments that do not appear easily in the main cash book is termed a small cash book.

In addition to maintaining a main or general cash registry, many firms additionally keep a tiny cash register known as a small cash register to record little business days today.

Small cash books are a kind of cash book that is intended to record frequent modest expenses, such as office teas, bus fares, petrol and journals. Usually, these modest expenses are paid with coins and monetary bills instead of cheques. The man in charge is known as a little cashier for spending little cash and documenting it in a small cash book.

The head cashier (sometimes referred to as the head or principal cashier), has a major responsibility to keep the general cash register of the firm, which records receipts and payments of hundreds of thousands of dollars a day. Therefore it generally allocates to a bookkeeper, receptionist or other trusted staff member the task of managing minor day to day cash transactions. A little cash book has a debit and a credit side, like the normal cash book. All revenues will be recorded on the debit side, and the small cashier will record all payments on the credit side of the little cash book.

Explanation

Payments for battery control over currency are often made in all company homes. However, it is impartial to pay modest expenses, such as stationery, travel, postage, telegrams, office teas and journals. In addition to the above-mentioned difficulty, a major business’ chief cashier has several significant transactions to deal with every day. The principal cashier will overload the chief cashier’s little costs in the chief cash registry.

The CEO distributes duties to selected top personnel for modest transactions every day to tackle these challenges. A modest sum and a separate book are supplied to register these tiny payments for that reason. The “Petty Cash Book” is documented in these tiny payments. The finding that is used for tiny transactions is termed “small cash” and the person responsible for little payments and their registration is called “small cash.”

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Maintenance systems Cash Small

For small cash maintenance, three distinct approaches are utilised. The following systems are:

1. Open system or common little cash system.

1. Fixed little cash scheme.

1. Small cash imprest mechanism.

Petty Cash Open or Ordinary System

The little cashier is provided with a lump payment to fulfil the small costs under this arrangement. The small cashier sends the account to the head cashier, who again pays a lump sum to the small cashier when the entire money is spent.

Petty Cash System Fixed

Under the fixed small cash method, the small cashier should be provided with a fixed sum for a specified duration. After the term, the smaller cashier provides the specifics of the little fees and, for the following defined period, the main cashier again provides a fixed sum.

Petty Cash Imprest System

The way to keep Petty Cash is the most scientific. The system estimates the entire small fee costs for a certain period and advances the money to the small cashier. This is referred to as the “cash print.” During the interval, the little cashier spends the printed currency.

After the period, the small cashier presents to the chief cashier the statements on the little expense. The sum of the little cashier is repaid and the balance is therefore refunded to the original amount. This method small cashier begins each time with a sum equal to the cash printed and a little cashier never exceeds the cash printed.

Imprest System Advantages

The imprest system offers the following benefits:

1. The leading cashier who is highly occupied with the primary cash book saves time.
2. This diminishes the risk of abuse of cash, as small cashiers cannot keep it idle.
3. It lowers the likelihood of misappropriation, as the cash imported is relatively little.
4. Errors are corrected fairly quickly when the cashier frequently checks the little cash record.
5. It educates young employees to take responsibility for money.

 Petty Cash Book Types

Two types of Petty cash books:

1.   Simple Petty Cash Book

2.   Analytical Petty Cash Book

1.Simple Petty Cash Book

Just like the main cash book is the Simple Petty Cash Book. The small cashier received shall be reported on the debit side of the payment system and all payments for small costs shall be entered in one column on the credit side.

 Simple Petty Cash Book Format

Simple Petty Cash Book Example

Record transactions for January 2019 in a Simple Petty Cash Book.

Solution

Analytical Petty Cash Book

It is the most advantageous technique of documenting petty cash payments. In this kind, a distinct column for each small cost is supplied on the credit side. When petty expenditure is reported in the total payment column, the identical amount is recorded in the appropriate petty expense column.

Analytical Petty Cash Book Format/Example

Analytical Petty Cash Book Example

List the following transactions for January 2019 in a small analytical cash book

Solution

The Petty cash operation

If a little cashier requires money, the major cashier gives him a check. The check is noted on the cash book’s payment side. The little cashier collects cash from the bank and notes the check-in in the Petty Cash Book receipts column.

If the small cash fund is to be paid, a small cash voucher (PCV) is created by the small cashier. A responsible official must approve this voucher before the small cashier performs the payment. Upon payment, the small cabinet map the date, payment information (in particular the column), the amount of the voucher (PCV No.) into the column Total Payment and also into the corresponding column of the analysis.

The first small cash voucher of the month is numbered 1 and the number of the month follows, for example, the first one in May is 1/5, the second is 2/5, the following 3/5, and so on.

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Ledger post petty cash book

The second cashier produces a cheque voucher after each Month when the small cashier comes to the main cashier to get a refund. The latter cashier specifies the sum of the different analysis columns of the small-cash book. Take the following facts as an example:

  Wages

$113.20

Wages	$113.20
Transport	$41.80
Stationary	$80.60
Staff Tea	$26.40
Telephone	$140.00
Total	$402.00

The entries in the main Cash Book are: If a check (for $402′) is issued to a small cashier

(a). The $402 is shown on the Cr. Payment on the Cash Book side (Bank Column).

(b). The wages account in the ledger is debited by $113.20; $41.80; $86.60; $26.40 in the Tea Staff account; and 140 dollars for the Telephone account. The account is not included in the directory.

Thus the debts in the main cash book agree to the credit. This means that the Petty Cash Book is not a part of double-entry accounting. It has a similar standing to a subsidiary book. The small cashier shall always have cash in the form of cash or small payment vouchers equal to the printing account.

Petty cash book format

A simple petty cash book format is provided below.

Example

John and James Company’s little cashier paid cash in March 2018 for the following expenses.

• 1 March: balance advanced; little cash $50.
• March 01: A minimum sum paid by the chief cashier is $200 for the previous month.
• March 05: purchased $25 liquid cleaning material.
• 10th March: Pay $20 to wash the vehicle.
• 13th March: Pencils and styles 15 dollars purchased.
• 17th March: $35 gasoline payments.
• 20 March: $55 paid for informal work.
• March 22nd: SBA donated $10 – a charity.
• 30 March: purchased an office broom for $5

Required: Record the transactions above in a small cashbook on the condition that the firm John and James uses a small cash printing device.

Solution

FAQ (Frequently Asked Questions)