Petty Cash Book | Explanation | Definition

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐏𝐞𝐭𝐭𝐲 𝐂𝐚𝐬𝐡 𝐁𝐨𝐨𝐤?

The petty cash book is the book. Which is used to record small expenses, which the involve small expense amounts? For Example Conveyance, Stationery and taxi fare, etc. The petty cash book is prepared by the petty cashier.

𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐏𝐞𝐭𝐭𝐲 𝐂𝐚𝐬𝐡 𝐁𝐨𝐨𝐤

These are two types of petty cash.

1. Simple petty cash book

1. Analytical petty cash book

𝐒𝐢𝐦𝐩𝐥𝐞 𝐏𝐞𝐭𝐭𝐲 𝐂𝐚𝐬𝐡 𝐁𝐨𝐨𝐤

A simple petty cash book is identical to a cash book. If petty cashier received any cash, so that is recorded on the left side column(Debit or receipt column) and he pays any cash. Then, The records on the right side column(Creditor or Payment).

𝐀𝐧𝐚𝐥𝐲𝐭𝐢𝐜𝐚𝐥 𝐏𝐞𝐭𝐭𝐲 𝐂𝐚𝐬𝐡 𝐛𝐨𝐨𝐤

An analytical petty cash book has two sides, The left-hand side is used for recording receipt of cash. The right side, which is used for recording payment analytical petty cash book is provided a separate column for recording a particular item of expenditure. For example Postage, Stationery, Travelling fare, etc. A column is usually provided for sundries to record an infrequent payment. Petty expenses are recorded on the right-hand side total payment column, the same amount is also recorded in the appropriate expense column.

𝐀𝐝𝐯𝐚𝐧𝐭𝐚𝐠𝐞𝐬 𝐨𝐟 𝐏𝐞𝐭𝐭𝐲 𝐂𝐚𝐬𝐡 𝐁𝐨𝐨𝐤

1. It saves the time of the main cashier.

1. It provides control over small payments.

1. These are not given to unnecessary detail.

1. It is convenient to post them directly into the ledger account.

It is a save of labored department. Which is used in writing of cash book and posting into the ledger? 

𝐈𝐦𝐩𝐫𝐞𝐬𝐭 𝐒𝐲𝐬𝐭𝐞𝐦

Under this system, The main cashier is given petty cash of petty cashier for a particular period (Week, Month, Year). And petty cashier spends the whole of that amount after that he submits the account to the main cashier. He will again have a fixed amount and spend at the beginning of the new period. This amount is called the imprest amount. This system of paying advance in the beginning and the amount spent from time to time is called the imprest system.

𝐀𝐝𝐯𝐚𝐧𝐭𝐚𝐠𝐞 𝐨𝐟 𝐈𝐦𝐩𝐫𝐞𝐬𝐭 𝐬𝐲𝐬𝐭𝐞𝐦 𝐨𝐟 𝐩𝐞𝐭𝐭𝐲 𝐜𝐚𝐬𝐡 𝐛𝐨𝐨𝐤

1. The petty cash book is checked by the cashier at regular intervals so that not a mistake.

1. Petty expenses are kept within limits of interest.

1. The petty cashier is not allowed to draw cash as and when he desires.

1. The petty cashier can never spend more than petty cash.