Frauds involving cash are likely to be minimized and where committed are likely to be detected at an early stage. These are expenses which are incurred day after day. The following points highlight the importance and advantages of petty cash book which can be taken as its objectives as well. So, the book, wherein day to day petty expenses for a particular period of a business concern, are recorded in chronological order of dates is called petty cash book.
The voucher would show the date, amount, recipient, purpose and general ledger account. The format of a triple column cash book is given below. Usually, the petty cash book are maintained on the basis of imprest system. Meaning of petty cash book, its importance and advantages. The small cash transactions taking place a significant number of times daily if recorded in a general cash book may make it. In a business house a number of small payments, such as for telegrams, taxi fare, cartage, etc. Person who maintains petty cash book is known as petty cashier and these small expenses are termed as petty expenses. Petty cash book explanation, format, example, ordinary and imprest. Petty cashier is not allowed to keep idle cash with him if the float is found to be more than adequate. A voucher is usually signed by the person who receives the money from the petty cashier for a specific purpose, let say for the purchase of postage stamps or stationery. 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. In almost all businesses, the bulk of transactions related to cash receipts and payments. The system is a form of managing petty cash in a business.
Also, find out its uses and functions in any contemporary business setup. What are the advantages of a imprest system for petty cash. 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. The main advantages of petty cash book publish your article. Petty cash book is a ledger book, which is used to record petty cash expenses formally in chronological order, with the date. Many expenses of small nature are recorded in petty cash book. 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 these are expenses which are incurred day after day. 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. Main cashier can focus on other major financial transactions of the business.
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. Fixed amount is paid to the petty cashier along with the imprest system. When petty cash is easy to get to employees, it is a suitable way to pay for little purchases. One of the primary uses of petty cash book is to keep a record of all minor expenditures for financial accountability reasons. Learn more about petty cash expense management, and decide which system is right for your business. Petty cash book the cash book as seen above is used for recording all major payments. Petty cash book helps in making the main cash book more informative, clean and clear by including only major transactions. For all detailed video solutions of ts grewal questions of xi and xii accountancy please keep visiting this channel. 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. In an analytical petty cash book, there exists separate heads for different petty expenses, which makes recording much easier.
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. Meaning of petty cash book and advantages of keeping petty. Cash and bank transactions can be recorded in cash book. Petty cash book and advantages of imprest system youtube. Click here to download a free petty cash book template. The most important part of a petty cash system is the documentation of each transaction.
Nov 22, 2019 petty cash book is used for recording payments of small expenses, which are of smaller denominations such as postage, stationery, conveyance, refreshment, etc. Notes on petty cash fund grade 10 accountancy petty cash. 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. Petty cash book supplies information regarding petty payments made on different heads more easily and quickly. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel. Petty cash book format example definition explanation. Documenting transactions is the way a business documents business expenses for tax purposes. Petty cash is a comprehensible and common method of paying for business operating cost. One major advantage of this system is that it saves time. Recording in a petty cash book does not require formal knowledge of accounting principles and techniques time saving. The advantages of using the imprest system are versatility, accountability, practicality, limitation of theft, ease of use and limitation of expenditure.
Petty cash book is used for recording payments of small expenses, which are of smaller denominations such as postage, stationery, conveyance, refreshment, etc. In an imprest system, the amount in hand plus the amount of all receipts should be equal to petty cash balance. As the petty cashier has to account for his expenses, before he can draw further sums, the petty cash book remains up to date. Double column cash book explanation, format, example. It relieves the cash book and the chief cashier of the burden of recording tiny and frequent payments. What are the merits or advantages of maintaining a petty. It is possible to find out daily cash and bank balance. Jul 16, 2019 the most important part of a petty cash system is the documentation of each transaction. The advantages of treble column cash book are stated below, time and laborsaving a good deal of time and labor are saved because for maintaining a treble column cash book cash account, bank account and discount accounts are not needed to be prepared in the ledger. Petty cash funds are routine expenses that involve the insignificant amounts of money not eligible for credit card and cheque payments. Columnar petty cash book and its preparation process. Avoid cash shortages by monitoring the history of cash flow and.
The image above is a sample of petty cash book advantages and disadvantages. At times, superior officers such as heads of departments do authorize the payment. The following are the main advantages of maintaining a cash book. Sep 26, 2019 petty cash book is maintained to record small expenses such as postage, stationery, telegram. It makes records of all petty expenses are payments systematically. A petty cash book, therefore, serves the purpose of a ledger, keeping track of all business payments made on a small scale. If all these payments are recorded in the cash book, it will become unnecessarily heavy. The importance and advantages of petty cash fund are as follows. Why petty cash is important for your business finances. The chief cashier is relieved from the cumbersome work of petty cash disbursement. Commission of fraud is reduced as the chief cashier verifies petty cash book alongwith vouchers and the petty cashier is more responsible. As head cashier check the accounts of previous month and gives advance for the coming month, does, errors if any are reduced. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. You can learn more about accounting from the following articles what is petty cash book.
Petty cash book maintains records of all petty payments systematically. Time wastage minimization under this columnar imprest petty cash book petty expenses are not needed to be posted in. Jun 18, 2019 the triple column cash book is a compact form of cash book in which all the three columns, i. For this purpose, a petty cashier is appointed by the firm, to pay for small payments usually below rs. Importance and advantages of petty cash book business performing a large number of petty transactions usually maintain a separate petty cash book.
Advantages of petty cash book the main benefits or advantages of petty cash book can be pointed out as follows. Petty cash is an easy to understand and familiar method of paying for company expenses. The cash book can be maintained properly as petty transactions are maintained separately. Find out what how much real cash you have available at any moment. Please like, share and subscribe the content for more high quality videos. Feb 08, 2019 for all detailed video solutions of ts grewal questions of xi and xii accountancy please keep visiting this channel. It facilitates for posting petty transactions in the bank cash book and budget sheet.
Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i. Sep 19, 2019 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. A separate column is allotted for each type of expenditure. A petty cash book is a book of vouchers which are prepared each time a disbursement is made from petty cash. Advantages and disadvantages of analytical petty cash book qs. What is the different cash book and petty cash book. Cash book definition, explanation types and advantages. Petty cash book helps in making the records of cash transactions uptodate because of division of labor in recording cash transactions. What is petty cash book write the advantages of petty cash. Recording of transactions in a petty cash book is easy. Petty cash book makes possible for making comparison of the petty expenses between two periods and helps in controlling such petty expenses more effectively.
This has been a guide to what is cash book and its definition. Advantages, disadvantages, and the pex alternative. An imprest system of petty cash is used for more control over cash in hand. What are the advantages of using the imprest system. Here are some advantages and disadvantages to using petty cash as an expense management solution. Apr 07, 2020 petty cash book the cash book as seen above is used for recording all major payments.
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. As head cashier checks the accounts of previous month and gives advance for the coming month, thus, errors if any are reduced 2. Petty cash book can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal. Petty cash book relieves the main cashier because it is prepared by the petty cashier. Cash book also serves the purpose of book of original entry as well as ledger.
Recording in petty cash book saves time and efforts. In other words, we can say that if we add a bank column to both sides of a single column cash. If we do not maintain a cash book and record all cash transactions in the journal, unnecessary time and labor would be required for debiting and. What are the merits or advantages of maintaining a petty cash book especially in large establishments. What are the advantages of the petty cash book answers. As we know, petty cash book advantages and disadvantages is important for our business. The triple column cash book is a compact form of cash book in which all the three columns, i. 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 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.
There might be a petty cash drawer or box in each department for. The source for the petty cash book is the petty cash voucher. Make sure you are taking advantage of all those petty cash transactions, so you can claim more legitimate business expenses and lower your business taxes. What are the advantages of maintaining a petty cash book.
What is the importance of petty cash in a business. A s the petty cashier has to produce to the chief cashier the petty cash book for inspection, it acts as a healthy check on the petty cashier. 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. Here all the cash and bankrelated transactions are recorded along with the discount on sales or purchase of goods. Petty cash book definition, types, format, examples. Sep 30, 2019 is the petty cash box a help or a hindrance. Dec 09, 2019 the source for the petty cash book is the petty cash voucher. Nov 02, 2019 usually, the petty cash book are maintained on the basis of imprest system. 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. What are the main advantages of maintaining cash book.
But, in every business a number of petty small payment like that for postage, carriage, stationery, entertainment, cartage, conveyance etc. At any time, the total of petty cash balance and all expenditures that have not been reimbursed to the petty cashier is equal to the agreed float. Using imprest, the petty cash of a company is kept at a constant rate. By keeping track of all petty cash transactions no matter how petty you have records to back up deductions for those small business expenses. The main advantages of imprest system of petty cash are as follows. This kind of petty cash book is known as analytical petty cash book. 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.
Read this article to learn about the meaning and preparation of analytical and imprest system of petty cash book. The advantages of analytical petty cash book are given below. As head cashier checks the accounts of previous month and gives advance for the coming month, thus, errors if any are reduced. Read on for more information on petty cash book advantages, format, systems, and example. The advantages of the imprest system are as follows. Petty cash book 2019, imprest system of petty cash advantages. Petty cash book meaning, cash book vs petty cash book. Is there a better way to solve the small expenditure dilemma. Advantages of using petty cash disadvantages of using petty cash highlights of petty cash fund policy. Cash book definition, types accounting format of cash book.
Any new enterprise owner need to know the significance of knowing how you can get ready a blank invoice template as this is the to start with move to finding paid out. Commission of fraud is reduced as the chief cashier verifies petty cash book along. Advantages and disadvantages of analytical petty cash book. Petty cash book 2019, imprest system of petty cash.
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