A separate book of account called petty cash book is maintained for recording cash payments for the current expenses. Cah book mcqs 1 is a set of multiplechoice question related to all four types of cash book i. The elements of a cash book can be understood as follows. Petty comes from the french word petit meaning small. Petty cash funds should be maintained in a secure, area such as a locked drawer or small safe. Also, it will facilitate the accountant or the organization to. With careful accounting, maintaining a petty cash fund will help simplify business transactions.
In these cases, the clerk can replenish what has been taken out once a month in order to keep track of the expenditures and help with the accounting of the petty cash. Small or large companies maintain 2 types of petty cash book for all cash transactions of a business. Such payments are generally handled by a petty cash imprest system whereby an amount of float is fixed. Cash book contains all cash receipts and payments, including bank deposits and withdrawals. This type of book is maintained just like a cash book. Start a petty cash fund by writing a check drawn on your company to petty cash.
Petty cash book definition, types, format, examples. It is simple to use, designed to save time, prevent errors and misuse, and produce reports suitable for easy accounting and checking. If the petty cash is not used all that often or if there is a larger amount in the box, you may never use all of the petty cash. Download cash book excel template 5 types of cash book templates with predefined formulas to help you record routine cash transactions of a company regularly. A separate column is allotted for each type of expenditure. But these small amounts of cash expenditure can cause big headaches for voluntary and community groups when the petty cash system goes wrong. A petty cash is a cash book used to enter all small or petty expenses obtained. It is an accessible, convenient way to pay for small purchases. 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, double column, three column and petty cash book.
Petty cash book format example definition explanation. Balancing is done the same way as in the case of cash and discount column. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Petty cash online application office expense management. This excel cash book is suitable for any small business that wants an easy bookkeeping method a simple way to track your income and expenses. In the company, the petty cash book is usually maintained by the administrative department of the company as the accounts departments are usually occupied by the larger business transactions and also the admin department is only responsible for such kind of expenses. Businesses generally keep small amounts of cash to meet small miscellaneous payments such as entertainment expenses and stationery costs. It describes about the books of accounts and register to be maintained, cash limits, payment beyond certain limit by cheques, finalization of accounts, etc.
Petty cashier is a person, who maintains the petty cash book. Bye law no 141 to 147 of maharashtra cooperative housing society bye laws. In practice, the chief cashier appoints a petty cashier to oversee all small transactions by keeping a detailed record. Petty cash book explanation, format, example, ordinary. However, the petty cash book may or may not be maintained on imprest system. 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. The cash book is updated from original accounting source documents, and is therefore a book of prime entry and as such, can be classified as a special journal unlike other special journals such as the purchases journal or the sales journal, the cash ledger book records debit and credit entries. If you find difficulty in answering these questions, read cash book chapter thoroughly from explanation section of the. The simplest way to do this is to write a check to petty cash using your business checking account.
C few entities maintain petty cash funds because of the risk of defalcation. Most cash should be deposited right away in the bank, but a small amount can be kept on hand in a petty cash account earmarked for minor. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Sometimes it may be maintained on nonimprest system. Local unit management should perform unannounced petty cash audits. For this purpose, a petty cashier is appointed by the chief cashier. Organizations separately maintain petty cash books but account for all small money spent over a given time in the main cash book. Enter the transaction on the debit or credit side and it will automatically calculate the cash on hand for you. This cashbook can be adjusted to suit your financial yearend and is. Prepare a two column cash book from the following entries. It may be maintained by ordinary or by the imprest system.
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. Take a quick multiple choice questions mcqs test about cash book. This type of cash book usually uses the imprest system. Place the current date on the date line of the check. One major advantage of this system is that it saves time.
A petty cash book is a record of smallvalue purchases before they are later transferred to the ledger and final accounts. It depends on the nature, volume and necessity of transactions of a business organization. Petty cash is an easy to understand and familiar method of paying for company expenses. This format makes it easier to record petty cash activity in the general ledger. A petty cash book records small cash transactions in separate accounts. Petty cash is a small accounting application developed by erachana technologies that can be used to effectively handle petty cash transactions in any organization. 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. Petty cash book is a formal summarization of petty cash expenditures, sorted by date. Any cash, which the petty cashier receives, will be recorded on the debit side left cash column of the book and any cash which he pays out will be recorded on the credit side right cash column of the boo k. Preparation of accounts of insurance companies accounting. So since the number of such transactions tends to be very high we maintain a separate cash book for them the petty cash book. The cash book is a chronological record of the receipts and payments transactions for a business. The additional analysis columns are used to analyze expenditures as they arise.
This kind of petty cash book is known as analytical petty cash book. To set up and maintain a petty cash fund, you must fund it with monies from your business. Petty cash works on the imprest system, in which there is an initial amount of money put into an account, which is drawn upon for a specific purpose in this case, petty cash. Most people use the imprest cash system to run the petty cash. Just click the start quiz button and start cash book mcqs quiz. Petty cash book system are also called as imprest system.
A petty cash account is simply money kept on hand to pay for minor cash items such as stamps, office supplies, tips, parking tolls, etc. It contains the summary of all books such as register of proposals, premium cash book, branch or agency cash book, petty cash book, claims cash book, first years premiums cash book etc. 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 expenditures of the business. A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i. It is another cash book which is maintained, generally, in large business. All the received cash is posted on the debit side and all payments and expenses are posted on the credit side of the cash book. The person who is responsible for the recording the receipts and the payments is known as the petty cashier. Local petty cash custodians are responsible for safeguarding petty cash funds and maintaining receipts and detail records to support all transactions. When the account goes below a certain specified amount, the system is replenished. 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.
Yet another variation on the petty cash book is to maintain it as a spreadsheet, where each item is recorded in a specific column that is designated for a particular type of receipt or expense. Such a cash book is maintained by the petty cashier who in most cases also handles the petty cash. The format of a triple column cash book is given below. Add a petty cash account to your chart of accounts if you do not already have one. After you download this excel file, then you watch the video tutorials part 1 and part 2 below to enable you use the template properly. This is the maximum amount of cash that can be held at any time. B the petty cash fund is almost always the subject of heavy substantive testing. Thus, the book is part of a manual recordkeeping system. Managing a petty cash account for your small business. When a business doesnt provide access to company credit cards, or employees would rather not wait to be reimbursed for purchases, using petty cash is a simple alternative.
The person who is maintaining petty cash book is called as a petty cashier. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. To get a clear picture of how it looks, go through the following format. An example of this format, using the same information as the preceding example, is as follows.
We can maintain cashbook in excel to manage our cash. These mcqs can help you to prepare for your exams, interviews and different tests. Read this article to learn about the meaning and preparation of analytical and imprest system of petty cash book. A brief guide to petty cash voluntary action lewisham. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and. The difference between the total of the debit items and that of the total column on the credit represents the balance of the petty cash in hand. It is easy to set up and will save you from writing a lot of small checks or using your personal funds. 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. A the petty cash fund should be maintained by someone involved in other cash functions.
You need to develop a set of policies or procedures dictating the handling of cash in your business to avoid problems such as theft and misappropriation. Totals are carried forward from page to page until the end of the periods. Accounting for petty cash explanation, related controls. Imprest system of petty cash fund the world impress means advance amount which is personal to certain person to make petty expenses. The petty cash book will be maintained by a separate cashier known as petty cashier in the accounting field. How to set up and maintain a petty cash account basic. 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.
The date of each transaction is recorded in this column. Get our petty cash system template1 on item number 2 from our free template page. In this book, separate columns are provided for usual head of expenditure. The petty cash account is used to maintain office cash transactions below a certain limit of amounts. I am the owner of the company, i withdraw money from bank for my own use and latteron if required i pay some bills in cash. Bye law no 141 to 147 maintenance of account books. Two types of petty cash book maintained by small or large companies for easy, quick and accurate recording of all cash transactions. As such, it contains all particulars of information received in the head office and may be called summary book.
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