Preparing petty cash book

Cash book contains cash transactions passing into and out of a business. How to prepare a petty cash book purchase information. To verify the accuracy of the cash book, it should be balanced daily which may be shown in the cash book with red pencil. This book records all those expenses which are small in amount and which are incurred on regular basis.

These small expenditures are usually paid using coins and currency notes rather than checks. A cash book is that unique book of accounts which fulfils the objective of both, a journal and a ledger. There might be a petty cash drawer or box in each department for. Petty cash reconciliation preparing and booking deposits to general ledger separation of duties. When petty cash is running low, record the petty cash expenses in quickbooks and pull out more cash to. 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. The cash book is a chronological record of the receipts and payments transactions for a business. Click here to download simple cash book excel template. After reading this article you will learn about the format of preparing cash book. Like a journal, it is the first book which records all the cash transactions of the business. From the initiation of journal, the ledger account is prepared, with the help of which the final books of accounts of the company is prepared. 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.

The amounts you record in your petty cash log and the balance you calculate each time you. General cash book is subdivided in the single column, double column, and treble column cash book. Most businesses use petty cash for this, monitoring payments in a petty cash book. Add a petty cash account to your chart of accounts if you do not already have one. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Petty cash journal entries based on the following petty cash information, prepare a the journal entry to establish a petty cash fund and b the journal entry to replenish the petty cash fund. 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. The intent of this activity is to see if there have been any undocumented disbursements. A separate column is allotted for each type of expenditure. One is used to record cash transactions, the second is used to record bank transactions and third is used to record discount received and paid. When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished. The transactions which are done on credit are not recorded while preparing the double column cash book. Read this article to learn about the recording of transactions in cash book and journal.

How process transactions in the petty cash book for more go to to donate. As employees use petty cash, they should keep a log of what expenses the petty cash was used for and how much was used. By keeping track of all petty cash transactions no matter how petty you have records to back up deductions for those small business expenses. As the petty cashier has to account for his expenses, before he can draw further sums, the petty cash book remains up to date. Rectification entries mistaken entries which are rectifyingcorrecting that entries. Petty cash book is a formal book of recording petty expenses which are incurred in cash. Preparing cheques, cheque payment vouchers, deposits, cash book, bank reconciliation, petty cash vouchers, timesheets, payroll and calculating nis, paye, vat, green fund and business levy. Cash book records all receipts of and payments in cash. Petty cash book explanation, format, example, ordinary and imprest. Such disbursements are a common problem in petty cash, where there is a high risk of fraud.

A three column cash book or treble column cash book is one in which there are three columns on each side debit and credit side. Here are five easy steps and two tips you should take to set up a petty cash account for your small business. In the case of double column cash book, cash column records all the transactions relating to cash so, it works as the cash accounts and the bank column records all the transactions relating to bank such as checks received, checks issued, etc so, it works as the bank accounts. 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. Documenting transactions is the way a business documents business expenses for tax purposes. A day bookcumledger kept for making entry of the cash transactions as well as posting to the cash and bank accounts is called cash book. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. Youll need to nominate a petty cash manager, typically an accountant, bookkeeper or other supervisor to oversee operations and collect receipts, if necessary. Required a state one advantage of the imprest system of petty cash.

Recording of transaction in cash book and journal with. This book records all those expenses which are small. There are two primary types of entries in the petty cash book, which are a debit to record cash received by the petty cash clerk usually in a single block of cash at. Label the four resulting columns date, purchase, amount and balance. It is another cash book which is maintained, generally, in large business. For this purpose, a petty cashier is appointed by the chief cashier. 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. Columnar petty cash book and its preparation process.

Meaning of petty cash book, its importance and advantages. A petty cash book is a ledger kept with the petty cash fund to record amounts that are added to or subtracted from its balance. How to post and balance off the aats 3column cash book. Petty cash book can be maintained either in a simple or in analytical way. Meaning of petty cash book a petty cash book is one in which all petty or small payments made through petty cash fund are recorded systematically. A single column cash book always shows debit balance debit side exceeding credit side because more cash cannot be paid than what we have. 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. Thus, the book is part of a manual recordkeeping system. Keep the petty cash book and box or tin in a safe place, such as the accountants or managers office or cubicle. Petty cash book is maintained to record small expenses such as. In past times, the cash book was a physical book with all the receipts manually recorded on the left hand side debit side and the payments manually recorded on the right hand side credit side, similar to the format shown below. Youll also want to purchase a lock box for the cash and receipts. To account for petty cash, create a transaction log that covers the date, the person who used the petty cash, a description of the transaction, and any other deposits or expenses.

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. Any petty cash should be deducted from the cash, if applicable. Each employee wishing to make a purchase should go through this representative, rather than leaving the. Managing a petty cash account for your small business. Read this article to learn about the following types of cash book and its preparation, i. Petty cash book helps to keep the main cash book in a compact form because numerous entries for small and petty items are recorded in the petty cash book itself. 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. How to prepare cash book and petty cash book youtube. This is the simplest form of cash book and is used in businesses where payments are made and received mostly in.

If you have a larger smb, you may want to set up petty cash accounts for each of your divisions. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Petty cash journal entries based on the following petty. Do not leave it in a common area, such as the lunchroom or meeting area. How to prepare petty cash bookpetty cash book in hindi. The cash book is balanced in the same way as a ledger account. On 1 march the bank column of his cash book showed a. It also acts as a subsidiary book to post all the cash. Petty cash book is maintained by the petty cashier. 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. The remaining cash, the checks, and payment cards should balance to the amount of the. Format of the petty cash book bookkeeping debits and credits. You may continue this throughout the notebook upon starting the petty cash book or rely on. Your petty cash book allows you to record relevant information about.

At times, every business finds it convenient to have small amounts of cash available for immediate payment of items such as delivery charges, postage stamps, taxi fares, supper money for employees working overtime, and other small items. Her transactions for the month of march 2015 were as follows. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. 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. In simple petty cash book there is one column each for recording of receipt of cash from the. When a trader keeps a bank account it becomes necessary to record the. In petty cash book, payments for petty items are recorded. Petty expenses are recorded in petty cash book in chronological order of dates instead of the cash book. A petty cashier receives a fixed amount of money from the head cashier with which he meets petty expenses of a certain period and records in chronological order of dates in the petty cash book. 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. Click here to download all accounting excel templates for rs 199. There are two primary types of entries in the petty cash b. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in. The employee, who keeps the petty cash book, is called petty cashier.

The first row is for the company name and second for the title of the template. 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. The strong spiral binding allows pages to lay flat while writing, and the white, canary paper sequence provides a copy of all payments received. There are the two methods of preparing petty cash book. Petty cash is a system that funds and tracks small purchases such as parking meter fees that arent suitable for check or credit card payments. In preparing a bank reconciliation, the amount of a canceled check omitted from the journal is added to the balance per companys records. Petty cash book format example definition explanation. Hence, the petty cash book is one in which all small items of expenses are recorded in a systematic manner made through petty cash fund. Petty cash book definition, types, format, examples.