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A petty cash book is something that is used when businesses want to make small purchases. Petty cash is a term that specifically refers to a small amount of money. Usually, this means a total that is less than 100 dollars. A petty cash book is used to account for these small petty cash purchases.
This cash is usually held by an employee designated as the custodian of the petty cash. When something is purchased using money set aside for petty cash purchases, an entry is made in a ledger referred to as the petty cash book.
Most companies refuse to issue company credit cards to a large number of employees. For this reason, petty cash may be required to cover a number of different business related expenses that employees may incur. For example, an office manager may need to use petty cash funds to purchase office supplies.
Having such a transaction be made with petty cash instead of credit creates less liability for the business. If the office manager used a credit card instead, there is a higher chance that large fraudulent purchases could be made.
Using a petty cash book also has other advantages. One of the most important of these is the time it can save. Writing checks for different small purchases can be quite time consuming. This is due to the fact that few people in a company actually have the authority to write checks. With a petty cash account, however, the people that write checks and the employees that use them can be free to attend to more important duties.
One of the most important parts of implementing a petty cash account is making sure that all cash taken from such an account is replaced with receipts or vouchers for proper accounting. Doing such record keeping is very important. It makes sure that every expense incurred is debited to the correct account. For example, the cost of landscaping supplies should be debited to landscaping. It also provides for a rather easy reconciliation of the account used to prove that the amount of receipts and cash on hand equal the total in the petty cash book.
Today, however, petty cash books generally exist as computer programs as opposed to actual physical ledgers. This mirrors the transition of accounting to digital files from paperwork on the whole.
What else can I help you with?
What is called as petty cash book?
petty cash book is the book which is used for the purpose of recording the payment of petty cash expenses.
How can you handle to petty cash?
A petty cash book is used to record miscellaneous transactions
What is the similarity of cash book and petty cash?
petty
When is the petty cash account debited?
The petty cash account is debited when a company establishes or increases its petty cash fund. This entry reflects the outflow of cash from the main cash account to the petty cash account. Additionally, it may be debited when replenishing the petty cash fund, as it accounts for the expenses incurred that were paid from petty cash.
What does restore the petty cash imprestmean?
Restoring the petty cash imprest refers to replenishing the petty cash fund to its original predetermined amount after it has been used. This process involves reviewing the receipts and expenditures to account for the cash spent, and then adding the equivalent amount back into the fund. The imprest system ensures that the petty cash balance remains consistent, facilitating better cash management and record-keeping. Once replenished, the petty cash can continue to be used for small, everyday expenses.
What are the difference of petty cash voucher and petty cash book?
petty cash voucher is released by the handler of the funds to support every payments made. petty cash book contains a summary of all petty cash disbursements, its total and the balance.
What is petty cash receipt?
A petty cash receipt is an invoice or receipt for items or services bought out of petty cash. Petty cash is the small amount of cash usually held by businesses for one off small items.
Analytical petty cash book?
The petty cash book which is prepared in columnnor form is called anylatical petty cash book
Is the entry to establish a petty cash account a debit to petty cash and credit to cash?
yes. the entry should be: petty cash fund debit cash in bank credit
What are the advantages of a Imprest system for petty cash?
An Imprest system of petty cash is used for more control over cash in hand. In an Imprest system, the amount in hand plus the amount of all receipts should be equal to petty cash balance. If at any time cash in hand and receipts do not equal the fixed amount of petty cash, then investigation should be done about the discrepancy.
How do you manegment a petty cash?
petty cash voucher is released by the handler of the funds to support every payments made. petty cash book contains a summary of all petty cash disbursements, its total and the balance.Petty cash is Current Assets. It is a current asset (CA) to the business because it brings future economic benefit and can be used, consumed and converted into cash with the 12 months period.
Is a debit to petty cash money that is taken out of petty cash?
credit
