Petty Cash Book:
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. For this
purpose, a Petty Cashier is appointed by the Chief
Cashier. The Chief Cashier advances a sum of money
to the Petty Cashier to enable him to meet petty
expenses for a fixed period. The Petty Cashier will
record this amount on the Debit Side of the Petty
Cash Book while the Chief Cashier will record the
same amount on the Credit Side of the Main Cash
Book.
The fundamental
difference between the Main Cash Book and the
Petty Cash Book is that only petty expenses are
recorded in the Petty Cash Book. No receipt (with
the exception of money received from the Chief
Cashier), however small it may be, is recorded in
it. But in the main Cash Book all receipts (big and
small) and large expenses are recorded.
Thus we see that in
large organizations both the books are essential,
although the importance of the Petty Cash Book is
somewhat less than the Main Cash Book.
Thus, the book in which small payments, which are
not convenient to record in the Main Cash Book,
(like postage, traveling expenses, purchase of
stationery etc.) are recorded is called Petty Cash
Book.
System Of Petty Cash Accounting :
1. Open System:
Under this system
the Petty Cashier at first receives from the Chief
Cashier a fixed sum of money for meeting petty
expenses. As soon as the said amount is spent, the
Chief Cashier again pays the required sum to the
Petty Cashier.
2. Fixed Advance System:
Under this system
the Petty Cashier receives from the Chief Cashier a
fixed Slim of money for a fixed period of time i.e.
$200 per month. The Chief Cashier will pay $200 to
the Petty Cashier every month irrespective of this
that whether the Petty Cashier has spent the total
sum or not.
3. Imprest System :
This system is
generally followed by most of the business concerns.
Under this system, the total petty expenses for a
particular period are estimated and that amount is
advanced by the Chief Cashier to the Petty Cashier.
This amount is called Imprest Cash. On the
expiry of the fixed period the Petty Cashier
prepares a statement of his expenses and submits it
to the Chief Cashier. This statement is known as
Statement of Petty, Expenses. The Chief Cashier
examines the statement and if he finds it correct,
hands over the Petty Cashier an amount equal to the
amount actually spent. This amount plus the amount
lying unspent with the Petty Cashier will be equal
to the Imprest Cash.
In this way the
Petty Cashier will start every time with an amount
equal to Imprest Cash. In other words, the amount
lying with the Petty Cashier will never exceed
Imprest Cash. Generally a columnar Petty Cash Book
is used in which different columns are provided for
different petty expenses.
The balance of the
Petty Cash Book will be shown on the asset side of
balance sheet as "Cash in hand" at the end of the
year.
Example:
From the following
particulars prepare a Petty Cash Book under Imprest
System. 2005
Jan.
1. Received from the Chief Cashier as
imprest cash $400.
Jan. 2.
Paid Taxi hire $20.
Jan. 3.
Paid postage $28 and stationery $60.
Jan. 4.
Purchased stationery $48.
Jan. 5.
Paid telegram charges $28 and bus fare
$4.
Jan. 6.
Bought postage stamps $96.
Jan. 7.
Paid $72 for repairs of typewriter. |
Solution:
Petty Cash Book
Amount
Received $ |
Date |
Particulars |
V. No. |
Total $ |
Traveling
Expenses $ |
Postages $ |
Stationery
$ |
Office
Expenses $ |
Misc.
Expenses $ |
400 |
2005 |
Cash
Received |
|
|
|
|
|
|
|
|
Jun. 1 |
|
|
|
|
|
|
|
|
|
Jun. 2 |
Taxi hire
A/c |
|
20 |
20 |
|
|
|
|
|
Jun. 3 |
Postage
A/c |
|
28 |
|
28 |
|
|
|
|
Jun. 3 |
Stationery
A/c |
|
60 |
|
|
60 |
|
|
|
Jun. 4 |
Stationery
A/c |
|
48 |
|
|
48 |
|
|
|
Jun. 5 |
Telegram
A/c |
|
28 |
|
28 |
|
|
|
|
Jun. 5 |
Bus fare
A/c |
|
4 |
4 |
|
|
|
|
|
Jun. 6 |
Postage
A/c |
|
96 |
|
96 |
|
|
|
|
Jun. 7 |
Repairs
A/c |
|
72 |
|
|
|
72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356 |
24 |
152 |
108 |
72 |
|
|
|
Balance
c/d |
|
44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400 |
|
|
|
400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44 |
Jun. 8 |
Balance
b/d |
|
|
|
|
|
|
|
356 |
|
Cash
received |
|
|
|
|
|
|
|
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