In large business concerns, the petty cash book is maintained in columnar or analytical form, with a separate column for each usual item of expense and a column. Recording in a petty cash book does not require formal knowledge of accounting principles and techniques. In this column, the date of receiptpayment of cash is recorded. To analyzing the individual payments you have to just total individual expenses columns. 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. Nov 01, 2014 cash book single column cash book or simple cash book in very simple method. Petty cash book can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal. Mar 25, 2018 simple petty cashbook example solution 2. Many expenses of small nature are recorded in petty cash book. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. For smallscale business, simple petty cash book is sufficient but on a medium or large scale business number of petty expenses increases hence it is desirable to have the separate record for each type of petty expenses. Petty cash book format example definition explanation.
At the end of the period a petty cash reconciliation is carried out. Recording of transaction in cash book and journal with. Meaning of petty cash book, its importance and advantages. Petty cash is the small cash reserves that businesses keep on the. Money received from head cashier is recorded on debit side and payments are recorded on credit side. 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. 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. During an accounting period petty cash is used to pay cash expenses which are supported by petty cash vouchers. The main advantages of petty cash book publish your article. A petty cash book is a record of smallvalue purchases before they are later transferred to the ledger and final accounts.
There might be a petty cash drawer or box in each department for. Recording of transaction in cash book and journal with specimen. In this type, a separate column for each petty expense is provided on credit side. What is the importance of petty cash in a business.
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. Such disbursements are a common problem in petty cash, where there is a high risk of fraud. Thus, the book is part of a manual recordkeeping system. The petty cash book will be maintained by a separate cashier known as petty cashier in the accounting field. The analytical petty cash book and the imprest system ppt video. As head cashier checks the accounts of previous month and gives advance for the coming month, thus, errors if any are reduced. A petty cash book is a book of vouchers which are prepared each time a disbursement is made from petty cash. Generally petty cash book is maintained on imprest system. How to prepare analytical petty cash book in excel spread sheet.
Double column cash book explanation, format, example. See this link to watch accounting classes for class 11. Petty cash count and cash certificate for the year end balance of cash in hand. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. These small expenditures are usually paid using coins and currency notes rather than checks. This kind of petty cash book is known as analytical petty cash book. Petty cash book maintains records of all petty payments systematically. The additional analysis columns are used to analyze expenditures as they arise. Compile a cash book with cash and bank columns from the following transactions.
The account is an outline of pertinent business transactions at one place relating to a person, asset, expense or profits named in the heading. Definition and explanation of cash book format, advantages. One of the total payment column and second in one of the analytical amount columns. Cash book contains individual columns for each expense every small payment is recorded on the credit side. What are the nature of transactions that are recorded in the petty cash book. The imprest system is designed to provide a rudimentary manual method for tracking petty cash balances and how cash is being used. Petty cash book is a type of cash book that is used to record minor regular. 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. Cash book contains cash transactions passing into and out of a business. In other words, we can say that if we add a bank column to both sides of a single column cash book, it would become a double column cash book.
A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i. Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i. Add up the total expenditure listed on each petty cash voucher in the petty cash fund the information can also come from the petty cash book. Subtract this amount from the calculated amount of cash withdrawn. Write out an analytical petty cash book from the following transactions. 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.
Single column cash booksimple cash bookwith solved. The keeping of the book is not different from the keeping of the main cash book the amount paid out by the chief cashier is credited in his cash book to complete the double entry. Definition of an account is proof in the general ledger that is used to accumulate and store debit and credit amounts. It is another cash book which is maintained, generally, in large business. Cash book single column cash book or simple cash book in very simple method. Under the system, the petty cash fund balance is always maintained at a fixed amount decided on when the fund is first established during an accounting period petty cash is used to pay cash expenses which are supported by petty cash vouchers. Totals are carried forward from page to page until the end of the periods.
The intent of this activity is to see if there have been any undocumented disbursements. It is the most advantageous method of recording petty cash payments. It is both a book of original entry as well as a book of final entry. Subsequent position of cheques that were not cleared in the year end. Recording in petty cash book saves time and efforts of the chief cashier. How the imprest system of petty cash book works your. Petty cash book supplies information regarding petty payments made on different heads more easily and quickly. This type of petty cash book is known as analytical petty cash book. Analytical petty cash book or columnar petty cash book i.
In large business concerns, the petty cash book is maintained in columnar or analytical form, with a separate column for each usual item of expense and a column for total. Other than the normal petty cash book, which resembles a normal cash book, there are two other types of petty cash books. Petty cash book introduction cash book accounts class 11 duration. In a business a number of small payments, such as for stationery, telegrams, taxi fare, cartage etc have to be. Importance and advantages of petty cash book business performing a large number of petty transactions usually maintain a separate petty cash book. As only totals of various columns are to be posted in the. There are two primary types of entries in the petty cash book, which are a debit to record cash received. This type of cash book usually uses the imprest system. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Let us learn about the petty cash book and the various systems of maintaining. A petty cash is a cash book used to enter all small or petty expenses obtained. The analytical cash book is a book kept by a petty cashier.
However, there are many times that businesses deal with such small amounts that. At the end of the month petty cash book receipt and payment column is totaled and balanced here total payments are balance cd i. If there is a residual balance, then there is a cash overage in the fund. Jul, 2019 the imprest system is an accounting system for paying out and subsequently replenishing petty cash. Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check.
Petty cash is a small reserve of cash kept onsite at a business location for incidental cash needs. 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. Analytical petty cash book or columnar petty cash book is different from the simple petty cash book in the sense that in this type of petty cash book, an analytical presentation of cash payment is made. Uses of petty cash book its a cash book used to enter daily petty expenses. How the imprest system of petty cash book works your business. While recording the transactions in petty cash book if all the expenses are analyzed and entries are recorded in cash book on the basis of this analysis such petty cash book is called analytical petty cash book. A column for sundries is usually added for miscellaneous payments. The analytical petty cash book and the imprest system. Imprest system of petty cash is a system where the petty cashier is given a lump sum in cash often called a float keeping in view the possible needs of the business to meet its petty expenses for a stated period, e. Petty cash not important a book of original entry, where small, usually insignificant amounts of money are recorded. Petty cash book definition, types, format, examples imprest and.
This type of cash book will allow managementproprietors to tell at a glance the total amount spent on each of these common expenses. The format of a petty cash book is simple and involves the details discussed below. The double column cash book also known as two column cash book has two money columns on both debit and credit sides one to record cash transactions and one to record bank transactions. Petty cash is also the title of the general ledger current asset account that reports the amount of the companys petty cash.
Improves employee accountability on business resources. In accounting, cash is the main account when dealing with the inflow and outflow of money in a business. Petty cash book is a cash book in which the petty cashier records petty cash. The ruling of analytical petty cashbook is given below. Before the rise in the use of credit cards and charge cards, nearly all companies used petty cash accounts to allow employees responsible for purchasing small supplies to do so with minimal hassle. For smallscale business, simple petty cash book is sufficient but on a medium or large scale business number of petty expenses increases hence it is desirable. 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. Under the system, the petty cash fund balance is always maintained at a fixed amount decided on when the fund is first established.
While recording the transactions in petty cash book if all the expenses are analyzed and entries are recorded in cash book on the basis of this. In an analytical petty cash book, there exists separate heads for different petty expenses, which makes recording much easier. Petty cash book explanation, format, example, ordinary and. In such a cash book there are preexisting columns for the usual expenses that recur quite frequently for an organization. In simple petty cash book there is one column each for recording of receipt of cash from the main cashier and for payment of petty expenses. The imprest petty cash system is a method of accounting for petty cash expenses.
All petty payments are to be classified into different heads and different columns are maintained. Also, it will facilitate the accountant or the organization to. When petty expense is recorded in total payment column, the same amount is recorded in the relevant petty expense column. The petty cash book is ruled in the form of the single column cash book with an amount column and addition oat columns for the more usual classes of expenditure. Petty cashier is a person, who maintains the petty cash book. In big business apprehensions, the petty cash book is maintained in analytical form, with a detach column for each standard item of expense and a column for total. Petty cash book meaning, cash book vs petty cash book. Account definition in terms of accounting qs study. Considered as the most beneficial method of recording petty cash payments. Explanation of columns in the analytical petty cash book. Sep 28, 2015 petty cash count and cash certificate for the year end balance of cash in hand. The voucher would show the date, amount, recipient, purpose and general ledger account. Petty cash book is maintained by the petty cashier.
All cash transactions are primarily recorded in it as soon as they take. Also, since most petty cash custodians are not trained as accountants, they may incorrectly record disbursements. These are expenses which are incurred day after day. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and. In module 12, which covered the bank cash book, the advantages of paying all cash and cheques into the bank intact were evident. Analytical and imprest system of petty cash book your article library. In this book, separate columns are provided for usual head of expenditure. In a business operating this type of cash book, small cash payments are usually made out of petty cash. Petty cash book allows periodical totals, therefore, saving on time. Petty cash book definition, types, format, examples. Petty cash book explanation, format, example, ordinary and imprest. Major l earnings outcomes preparation of petty cash book in this video ive explained about petty cash book which is a ledger kept with the. 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. Like columnar petty cash book, it also contains many money columns in the credit side and one money column in the debit side and a particular column and a date column are also similar to that of the columnar or analytical petty cash book.
The primary bookkeeping record in singleentry bookkeeping is the cash book, which is similar to a checking account register in uk. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and postage. Petty cash book makes possible for making comparison of the petty expenses between two periods and helps in controlling such petty expenses more effectively. The credit side consists of several analysis columns. Ncert solutions for class 11 financial accounting recording. Petty cash book explanation, format, example, ordinary. 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. The format of the analytical petty cash book is as under. Analytical and simple petty cash books are reliable in monitoring how small transactions routinely take place in a business. It is also called as analytical petty cash book, as it analysis the payments under different heads separately. How to analyze petty cash with excel petty cash template 1.
Petty cash book can be maintained either in a simple or in analytical way. Separate account records are maintained for petty cash, accounts payable and receivable, and other relevant transactions such as inventory. Nov 27, 2019 the imprest petty cash system is a method of accounting for petty cash expenses. For this purpose, a petty cashier is appointed by the chief cashier. Sep 28, 2019 in an analytical petty cash book, there exists separate heads for different petty expenses, which makes recording much easier. One major advantage of this system is that it saves time. In the analytical version, a separate column is used for. The initial fund would be created by issuing a cheque for. Mar 04, 2017 this is a video tutorial to explain how to use our free petty cash template1 which can be downloaded from.