what is a petty cash book? what are the rules for entering the transactions in it?
Petty Cash Book is used for recording payment of petty expenses, which are of smaller denominations like postage, stationery, conveyance, refreshment, etc. Person who maintains petty cash book is known as petty cashier and these small expenses are termed as petty expenses.
It is prepared by the below given two methods.
Ordinary system: Under this system, a certain sum of money is given to the petty cashier for the payment of petty expenses. After spending the whole amount, the accounts are submitted by the petty cashier to the main cashier.
Imprest system: Generally, Petty Cash Book is maintained using this system. Under this system, a fixed sum of money is given to the petty cashier in the beginning of a period to meet the petty expenses to be incurred in that period. At the end of the period, the amount spent by the petty cashier is reimbursed. So, the petty cashier has the same fixed amount of money in the beginning of the next period.
The Performa of Petty Cash Book is given below.
Petty Cash Book | ||||||||||
Dr. | Cr. | |||||||||
Amount Received | Date | Particulars | Voucher No. | Amount Paid Rs | Analysis of Payments | |||||
Postage | Stationery | Conveyance | Telephone and Telegram | Miscellaneous | Remarks | |||||
When the petty cashier receives the amount of money , it is recorded in the Particulars Column of the Petty Cash Book as 'To Cash A/c' (if amount received in cash) or 'To Bank A/c' (if amount received through cheque). The amount received is entered into the 'Amount Received Column'. During the period, whenever, the petty cashier incurs or pays any amount for Postage, Stationery, etc., he records such expenses by writing the name of respective expenses in the 'Particulars' Column and enters the amount paid or incurred into the corresponding Amount Paid Column and also under the concerned head of the expense. At the end of the period, the Petty Cash Book is closed by summing the Amount Paid column. This aggregate sum should equal to sum of all the expenses. The difference between the Opening Cash Balance and Closing Cash Balance is recorded as 'Balance c/d' for the next period. This will be written as 'Balance b/d' at the opening of the following period.