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. Petty cash would be susceptible to a accounting errors because it has no sufficient documents for tracking the cash. In most cases, the petty cash book is an actual ledger book, rather than a. There might be a petty cash drawer or box in each department for. A petty cash book is a ledger kept with the petty cash fund to record amounts that are added to or. Uses of petty cash book its a cash book used to enter daily petty expenses like cost of stationery, postage and xerox copy and so on. Meaning, types and importance of petty cashbook srd law. It is another cash book which is maintained, generally, in large business.
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. Meaning of petty cash book, its importance and advantages. Petty cash book saves time because each payment under particular head is not posted into the ledger separately. However, failing to hold employees accountable for petty cash may encourage theft or inappropriate use of company resources. 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 cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Require that employees maintain a running petty cash log for every transaction, including receipts. A separate column is allotted for each type of expenditure. 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. Petty cash is the small amount of cash that is kept on hand by a company to pay for minor, inexpensive purchases during the normal course of operations.
It is an accessible, convenient way to pay for small purchases. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. A triplethree column cash book to record cash, bank and purchase discount and sales discount. Recording of transactions ii petty cash book solutions. A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i. Petty cash book is a formal book of recording petty expenses which are incurred in cash. What is a cash book definition, explanation and types. Petty cash definition of petty cash by the free dictionary. In most cases, the petty cash book is an actual ledger book, rather than a computer record. To pay for small purchases which require cash, such as food for the office lunch or coffee supplies, or for parking. 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. A doubletwo column cash book to record cash as well as bank transactions. Petty cash book definition of petty cash book by the. 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.
When cash is received it is entered on the debit or left hand side. You can find the questionsanswerssolutions for the chapter 4 of cbse class 11 accountancy in this page. Petty cashier is a person, who maintains the petty cash book. Petty cash definition and meaning collins english dictionary. A petty cash book to record small day to day cash expenditures. 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. Here we discuss the format of petty cash book, types of petty cash systems including the ordinary and imprest system. Cash book is regularly reconciled with the bank statements as an internal auditing measure. Tripal or three column cash book is a book with cash, bank and discount column. A petty cash voucher is a standard form used as a receipt whenever cash is withdrawn from a petty cash box.
Cash book definition, example and format of cash book. Petty cash is an easy to understand and familiar method of paying for company expenses. Petty cash definition is cash kept on hand for payment of minor items. Recording of transactions ii petty cash book solutions this page contains the cbse accountancy class 11 chapter recording of transactions ii notes.
For this purpose, a petty cashier is appointed by the firm, to pay for small payments usually below rs. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in detail. The credit side consists of several analysis columns.
Meaning, pronunciation, translations and examples log in dictionary. This is the only amount of cash that is not immediately deposited in the bank account after it is received. 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. A petty cash can be theft by the employees of the organization. The voucher is typically purchased from an office supply store. Petty cash book is a ledger book, which is used to record petty cash expenses formally in chronological order, with the date. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. Petty definition, of little or no importance or consequence. Petty cash, also known as cash on hand, refers to small amounts of cash kept on hand in a business.
A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. After having her expense claims overruled, she took the money from petty cash. Petty cash book helps in making the records of cash transactions uptodate because of division of labor in recording cash transactions. Journal in which all cash receipts and payments including bank deposits and withdrawals are recorded first, in chronological order, for posting to general ledger. This book records all those expenses which are small in amount and which are incurred on regular basis. Petty cash definition, a cash fund for paying small charges, as for minor office supplies or deliveries. 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. The posting is made with the periodical total at a time. This petty cash book is prepared on the same lines of the simple petty cash book. Uses of petty cash book its a cash book used to enter daily petty expenses. Petty cash financial accounting simple book production.
A petty cash fund is an amount of cash that a business uses to make small, miscellaneous purchases. It should be used in conjunction with procedural information, resources, and forms, which outline the application of this policy and may be found on the petty cash administration section. Petty cash book definition, types, format, examples. A petty cash voucher or petty cash receipt is a form that you use to register the payment from the petty cash fund. For one particular purchase, any petty cash book usually includes the description of the purchase, the date of the purchase and the amount used for the purchase. Petty cash definition of petty cash by merriamwebster. In larger firms, it is commonly divided into two parts. Each entry in the petty cash book should include the date, the amount, and what was purchased with the petty cash. The petty cash book is a recordation of petty cash expenditures, sorted by date. Companies normally use checks to pay their obligations because checks provide a record of each payment, but they also maintain a petty cash fund to pay for. Examples include postage due, reimbursement to employees for small purchases of office supplies, and numerous similar items. This video help you to solve all your practical problems of your book as this video has a question which will. Petty cash is a system that funds and tracks small purchases such as parking meter fees that arent.
There are two primary types of entries in the petty cash b. Petty cash is money that is kept in the office of a company, for making small payments in cash when necessary. This guide memo outlines policy on establishing and managing a petty cash fund. The only difference is that the payments side ruled into suitable column for recording expenses that are repetitive in nature.
The establishment of a petty cash system begins by making out a check to cash, cashing it, and placing the cash in a petty cash box. 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. Petty cash book is a formal summarization of petty cash expenditures, sorted by date. Petty cash is often used to pay for postage, small office supplies, and other small purchases. You can use petty to describe things such as problems, rules, or arguments which you. Petty cash meaning in the cambridge english dictionary. The initial fund would be created by issuing a cheque for. Petty cash book format example definition explanation.
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. 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. A petty cash voucher is usually a small form that is used to document a disbursement payment from a petty cash fund. Similarly, when cash is paid out the same is recorded on the credit or right hand side of the cash book. The number of daily petty expenses of large business organizations such as paper, ink. In this book, separate columns are provided for usual head of expenditure. Petty cash, also known as imprest cash, is a fund established for making small payments that are impractical to pay by check. A small fund of money for incidental expenses, as in an office. Separate account records are maintained for petty cash, accounts payable and receivable, and other relevant transactions such as inventory. The deputy head shall at the end of every fiscal year. 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. 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. Define petty cash examine how petty cash is managed. In almost all businesses, it is found necessary to keep small sums of ready money with thecashier or petty cashier for the purpose of meeting small expenses such as postage, telegrams, stationary and office sundries etc.
It is a physically small form, since it must fit within the petty cash box or drawer. Relatively small amount of cash kept at hand for making immediate payments for miscellaneous small expenses. Petty cash book explanation, format, example, ordinary and imprest. The cash book is a chronological record of the receipts and payments transactions for a business. Due to lack of control, petty cash are always in a chance of misappropriating of the fund. Cash book explanations show your love for us by sharing our contents. How to prepare petty cash bookpetty cash book in hindi. A small amount of cash kept on hand by a business for incidental expenses. A petty cash fund will undergo periodic reconciliations, with. How the imprest system of petty cash book works your. Petty definition and meaning collins english dictionary. Thus, the book is part of a manual recordkeeping system. There are two primary types of entries in the petty cash book, which are a debit to record cash received.