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 . Here we discuss the format of Petty Cash Book, Types of Petty Cash Systems including the Ordinary and Imprest System along with its advantages and. The maintenance of a small cash balance to meet these petty payments. The Imprest System is used for petty cash book maintenance. For example, On June 1 .
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The petty cash book is a book of vouchers which are made each time an expense is made from petty cash (money). Always the voucher would show the amount. Definition. The book in which those small payments are recorded, which are not convenient to record in main Cash Book, is called petty cash. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Thus Sample Petty Cash Book (Running Balance).
Skip to content Menu. Petty cash systems 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.
The cash is given to the petty cashier either on ordinary system or imprest system which are briefly explained below: Ordinary system Under ordinary system, a lump sum amount of cash is given to the petty cashier. Imprest system 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.
Advantages of imprest system: The imprest system of petty cash is used by most of the companies because of the following advantages: The imprest system reduces the chances of misuse of cash because the float can be immediately reduced if it is found to be more than adequate for the agreed period.
Under this system, the chief cashier periodically checks the record of petty cash. If an error is committed by petty cashier, it can be detected and rectified soon. The imprest system enables significant saving to be effected to post small items to accounts in the ledger since it uses an analysis system that collects small items together into weekly or monthly totals.
This system trains young staff members in handling cash with responsibility. There are little to no chance of misappropriation of cash by the person in charge because the imprested sum is usually very small. Show your love for us by sharing our contents. Excellent explanation Reply.
It helped me with my business studies project Reply. Nice Reply.
Splendid explanations,, assisted me in my assignment Reply. All receipts are recorded on the debit side and all payments are recorded on the credit side of petty cash book by the petty cashier. Petty cash systems 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.
The cash is given to the petty cashier either on ordinary system or imprest system which are briefly explained below: 1. Ordinary system Under ordinary system, a lump sum amount of cash is given to the petty cashier.
When the whole amount is spent, the petty cashier submits the details of petty expenditures recorded in the petty cash book to the head or chief cashier for review.
Imprest system 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. Simple Petty Cash Book is just like the main cash book.
Cash received by the petty cashier is recorded on debit side and all payments for petty expenses are recorded on credit side in one column. It is the most advantageous method of recording petty cash payments. When petty expense is recorded in total payment column, the same amount is recorded in the relevant petty expense column.
Record the following transactions in an analytical petty cash book for the month of January Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Petty Cash Book. Next page.
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