What is a cash book definition, explanation and types. The cash book is a chronological record of the receipts and payments transactions for a business. Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i. 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. A petty cash book to record small day to day cash expenditures. Thus, the book is part of a manual recordkeeping system. The credit side consists of several analysis columns. Petty cash, also known as cash on hand, refers to small amounts of cash kept on hand in a business. The book in which those small payments are recorded, which are not. The cashier gives the cash to the petty cash custodian, who includes it in the petty cash fund. Debit side is known as receipt side and credit side is known as payment side.
Petty cash book is a type of cash book that is used to record minor regular. Start a petty cash fund by writing a check drawn on your company to petty cash. Definition and explanation of cash book with examples. A cash book is a financial journal in which cash receipts and payments including bank deposits and withdrawals are recorded first in a chronological order ie recorded according to the date of transaction. A petty cash book is an accounting book used for recording expenses which are small and of. Petty cash is money that is kept in the office of a company, for making small payments.
These credits can be for such transactions as payments for meals, flowers, office supplies, stamps, and so forth. Petty cash definition of petty cash by the free dictionary. Separate account records are maintained for petty cash, accounts payable and receivable, and other relevant transactions such as inventory. Uses of petty cash book its a cash book used to enter daily petty expenses. Cash book is also balanced and like any ledger account, balance of cash book is carried forward and brought forward periodically. Meaning of petty cash book a petty cash book is one in which all petty or small payments made through petty cash fund are recorded systematically. There are two primary types of entries in the petty cash book, which are a debit to record cash received. If the chief cashier records petty expenses in main cash book then chief. 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.
The most common way of accounting for petty cash expenditures is to use the imprest system. Just like the other type of books, it records receipts from cash and bank on the left side and payments on the right side. Since the petty cash book analysis the expenses into a number of heads of expenses, the name given to it is analytical petty cash book. Cash book explanations show your love for us by sharing our contents. Petty cash book definition, types, format, examples. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. Petty cash book is maintained by the petty cashier. It is a special book that will record only one type of transactions cash transactions. Meaning, types and importance of petty cashbook srd law. Read this article to learn about the following types of cash book and its preparation, i. Also known as a two column cash book, a double column cash book is the one which has a bank column in addition to the regular cash column. A double two column cash book to record cash as well as bank transactions. Two types of petty cash book maintained by small or large companies for easy, quick and accurate recording of all cash transactions.
Petty cash is often used to pay for postage, small office supplies, and other small purchases. Examples of petty cash controls include a limit such as 10% of the total fund on. Petty cash book definition of petty cash book by the. A small fund of money for incidental expenses, as in an office. For recording transactions in the simple cash book, the foremost step is to understand. Managing a petty cash account for your small business. In an organization thousands of cash transactions occur in a year and journalizing them all is tedious work. Cash book the cash book is a ledger in the sense that it is designed in the form of a cash account and records cash receipts on the debit side and cash payments on the credit side. A cash book is the record of all the business transactions in the form of notes or. If the chief cashier records petty expenses in main cash book then chief cashier and main cash both will be overburdened. There might be a petty cash drawer or box in each department for. The primary bookkeeping record in singleentry bookkeeping is the cash book, which is similar to a checking account register in uk. Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check.
There are two primary types of entries in the petty cash book, which are a debit to record cash received by the petty cash clerk usually in a single. 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. Columnar petty cash book and its preparation process. Since the petty cash book analysis the expenses into a number of heads of expenses, the name. Synonyms for petty cash include spending money, fund, kitty, mad money, pin money, pocket money, pool, small change, change and allowance.
Keeping track of petty cash using an excel spreadsheet will consist of two primary steps. Petty cash book can be maintained either in a simple or in analytical way. A separate column is allotted for each type of expenditure. A triplethree column cash book to record cash, bank and purchase discount and sales discount. The person who maintains the petty cash book is known as petty cashier. Ordinary system of petty cash fund under this system petty cashier is given a certain amount of cash for meeting petty expenses of the office, when he spends nearly the whole amount, he submits. Here we detail about the three types of cash book, i. Petty cash should be properly controlled with a petty cash log and accurately entered into the bookkeeping system in exactly the same way you would maintain a bank account. Petty cash book explanation, format, example, ordinary.
Here we discuss the format of petty cash book, types of petty cash systems including the ordinary and imprest system. Petty cash meaning in the cambridge english dictionary. 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. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. Here we discuss the format of petty cash book, types of petty cash systems. Meaning of petty cash book, its importance and advantages.
Add a petty cash account to your chart of accounts if you do not already have one. Petty cash or the petty cash fund is a small amount of cash on hand used. To pay for small purchases which require cash, such as food for the office lunch or coffee supplies, or for parking. Petty cash is the small amount of cash that is kept on hand by a company to pay for minor, inexpensive purchases during the normal course of operations. Simple cash book contains only one amount column on each side debit and credit for recording cash receipts and cash payments. Petty cash meaning, examples accounting for petty cash. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. The receipts are recorded in the dr side and the payments are recorded in the cr side of the cash book. In larger firms, it is commonly divided into two parts. Petty cash definition and meaning collins english dictionary.
Journal in which all cash receipts and payments including bank deposits and withdrawals are recorded first, in chronological order, for posting to general ledger. Petty cash book format example definition explanation. When cash is received it is entered on the debit or left hand side. As if we see structural view of the petty cash, it can include 1 date 2 description of expenses particulars 3 amount credit or. 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.
Petty cash means the small amount that is allocated for the purpose of paying the small expenses which the company occurs in its day to day operations where it is unreasonable to issue the check and for managing the same custodians are appointed by the company. These are expenses which are incurred day after day. It is another cash book which is maintained, generally, in large business. Petty cash book explanation, format, example, ordinary and imprest. The petty cash fund can be operated in the following two ways. If there is a petty cash book, the custodian enters the amount of the cash received in the book, and updates the running total. Cash book definition, example and format of cash book. This type of book is maintained just like a cash book. Basically, petty cash book is also containing the two sides, a credit side expenses and cash payments and a debit site cash receipts. In most cases, the petty cash book is an actual ledger book, rather than a computer record. A separate book of account called petty cash book is maintained for recording cash payments for the current expenses. The person who maintains the main cash book and advance money to petty cashier to meet petty expenses is the main or head cashier. 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. 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.
The petty cash book is a formal summarization of petty cash expenditures, sorted by date. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Similarly, when cash is paid out the same is recorded on the credit or right hand side of the cash book. Petty cash book definition, types, format, examples imprest and. Meaning of petty cash book the word petty is derived from the french word petit which means small. Balancing is done the same way as in the case of cash and discount column. To support our effors you can donate a small amount by following this link. For this purpose, a petty cashier is appointed by the chief cashier. Cash that a company keeps available for small transactions with customers. It is an accounting book used for recording expenses which are of small and of. Petty cash book there are two primary types of entries in the petty cash book, which are a debit to record cash received by the petty cash clerk and a large number of credits to reflect cash withdrawals from the petty cash fund. Ordinary system imprest system in this system petty cashier is given appropriate amount of cash after spending the whole of that amount the submits the account to the head cashier this is the system of paying advance in the beginning.
Cash book is regularly reconciled with the bank statements as an internal auditing measure. Examples of transactions that a petty cash fund is used for include. Petty cash is a small amount of cash that any business can keep on their premises in a lockable container. Petty cash is a small amount of discretionary funds in the form of cash used for expenditures. The cash is given to the petty cashier either on ordinary system or imprest system. 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 can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal. Analytical petty cash book an analytical petty cash book is one in which there is one amount column in its debit side and a number of columns on its credit side for different heads of expenses. 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. This is the only amount of cash that is not immediately deposited in the bank account after it is received. Petty cash is also the title of the general ledger current asset account that reports the amount of the companys petty cash. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in detail. A cash book is that unique book of accounts which fulfils the.