What is petty cash book? Write the advantages of petty cash book?

Petty Cash Book is used for recording payments of small expenses, which are of smaller denominations such as 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.

1. 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.

2. Imprest 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.

Simple method: Recording of transactions in a petty cash book is easy. In an analytical Petty Cash Book, there exists separate heads for different petty expenses, which makes recording much easier. Recording in a Petty Cash Book does not require formal knowledge of accounting principles and techniques.

Time saving: Recording in Petty Cash Book saves time and efforts of the chief cashier.

Efficient control: At the end of a period,Petty Cash Book is audited by the main cashier, so frauds and errors are less probable.

Convenient handling: Recording in Petty Cash Book is convenient, as entries are to be recorded under separate heads, which makes posting easier and quicker.