Two types of petty cash book

Under the imprest petty cash system as the totals of different heads of expenditures are posted in ledger accounts after a. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. A government office requires to pay different types of petty expenses daily. In this book, separate columns are provided for usual head of expenditure. 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. Second part is the cash gross journal which records all cash gross. What is a cash book definition, explanation and types. In an organization thousands of cash transactions occur in a year and journalizing them all is tedious work. Cash or cheque received from the head cashier is recorded in the column of amount received and petty expenses paid recorded in the column of amount paid. When he spends nearly the whole amount, he submits the account of expenses along with surplus amount. A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i. Petty cash, also known as cash on hand, refers to small amounts of cash kept on hand in a business. Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque.

Here we discuss the format of petty cash book, types of petty cash systems. Two types of petty cash book maintained by small or. Here we detail about the three types of cash book, i. Petty cashier is a person, who maintains the petty cash book. When cash is received it is entered on the debit or left hand side. To pay for small purchases which require cash, such as food for the office lunch or coffee supplies, or for parking. First part is the cash outlay journal that records all cash payments, much as accounts collectable and budget items. One is ordinary and another is imprest system as explained below. Double column cash book explanation, format and examples. How to prepare petty cash bookpetty cash book in hindi. A two column cash book has a pair of debit columns for recording cash and bank receipts, whereas. Some businesses have to provide discounts during their cash transactions. Petty cash book and types of petty cash book part 1.

The check amount should be sufficient to handle most cash purchases for the time period you choose, but not so large as to encourage theft. System of petty cash there are two types of petty cash. Thus, the book is part of a manual recordkeeping system. Petty cash book can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal. The petty cash fund can be operated in the following two ways. Double column cash book or two column cash book consists of two columns of amount on each side to record cash and bank transactions. There are two primary types of entries in the petty cash book, which are a debit to record cash received. Simple cash book is a document which records inward and outward cash transaction of a business without any discounts or tax. Simple petty cash book is divided into two sides, a receipt side and a payment side.

The receipts are recorded in the dr side and the payments are recorded in the cr side of the cash book. 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. However, double column cash book with the discount column is widely used. Cash book definition, example and format of cash book. Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in detail.

Called a petty cash fund, this cash is used for making small purchases in lieu of writing a check or using a company credit card. This article throws light upon the three main types of cash book that can be maintained in a farm business. Petty cash book format example definition explanation. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Cash book contains cash transactions passing into and out of a business. Cashbook is a financial journal which contains all the cash receipt and cash payments including the deposit in bank and withdrawal from the bank. 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.

It is a special book that will record only one type of transactions cash transactions. A petty cash is a cash book used to enter all small or petty expenses obtained. A double two column cash book to record cash as well as bank transactions. Verification of arithmetical accuracy of petty expenses. Ordinary system of petty cash under it, the petty cashier is given a certain amount of cash for meeting petty expenses. Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs. Cash is a real monetary instrument like currency, i. Concept and meaning of petty cash fund and system of petty. Prepare an analytical petty cash book from the following information provided by mr. These types of expenditures occur in government offices frequently. Read this article to learn about the following types of cash book and its preparation, i. A single column cash book to record only cash transactions. Also, pass a journal entry and post them to their respective ledger. A triple three column cash book to record cash, bank and purchase discount and sales discount.

A company will assign a custodian whose job it is to make sure that all monies are accounted for through a receipt or other appropriate documentation. Reconciliation is an accounting process that compares two sets of records to check that figures are correct and in agreement. 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 block of cash at infrequent intervals, and a large number of credits to reflect cash withdrawals from the petty cash fund. You should write a check to the custodian to initially establish the fund. The debit column is used for entering the balance of cash in the hand of petty cashier at the beginning of the period and the amount received. 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. 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. 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. Keeping track of petty cash using an excel spreadsheet will consist of two primary steps. 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 larger firms generally divide the cash book into 2 parts. Petty cash book is a formal book of recording petty expenses which are incurred in cash. Simple cash book contains only one amount column on each side debit and credit for recording cash receipts and cash payments.

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. Just like the other type of books, it records receipts from cash and bank on the left side and payments on the right side. 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. Examples of these payments are office supplies, cards, flowers, and so forth. It would be come too bulky and difficult to handle therefore, it is usual for the business units to maintain a separate cash book to record small payments only. Petty cash book definition, types, format, examples. General cash book is subdivided in the single column, double column, and treble column cash book. Thus, the book in which small payments, which are not convenient to record in the main cash book, like postage, traveling expenses, purchase of stationery etc. A triplethree column cash book to record cash, bank and purchase discount and sales discount. 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. Book refers to a compiled record of the information available in the written or printed form thus, we can say that cash book is the record of all the business transactions in the form of.

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. In such a cash book there are preexisting columns for the usual expenses that recur quite frequently for an organization. Columnar petty cash book and its preparation process. Other than the normal petty cash book, which resembles a normal cash book, there are two other types of petty cash books. In this video, you will learn how to treat a contra entry in the cash book. It is another cash book which is maintained, generally, in large business. Petty cash book explanation, format, example, ordinary. Simple petty cash book a simple petty cash book is one in which there is only one amount column on its both sides with common date and particular column. Similarly, when cash is paid out the same is recorded on the credit or right hand side of the cash book.

Notes on petty cash book other other cash and banking. For recording transactions in the simple cash book, the foremost step is to understand. Petty cash book meaning, cash book vs petty cash book. Cash book explanations show your love for us by sharing our contents. The petty cash book will be maintained by a separate cashier known as petty cashier in the accounting field. Small or large companies maintain 2 types of petty cash book for all cash transactions of a business. Petty cash is stored in a petty cash drawer or box near where it is most needed. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. It helps to control petty expenses more effectively by comparing of petty expenses between one and two period. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and. The credit side consists of several analysis columns. All the receipts in cash are recorded on the left side of the cash book entries. Petty cash book definition, types, format, examples imprest and.

Petty cash procedures are established by businesses or other organizations to handle small amounts of cash. It is impractical and inconvenient for paying such petty expenses, like bus fair, cartage. A separate column is allotted for each type of expenditure. Rather than keeping cash acoount and bank account apart from each other, double column cash book enables us to keep these two accounts side by side. There are four major types of cash book that companies usually maintain to account for their cash flows. The petty cash fund is an amount, which is maintained by the government office for making payments of small expenditures like refreshment, newspapers, postal stamp, taxi fare etc. What are the different types of petty cash procedures. 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. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Petty cash book explanation, format, example, ordinary and imprest. Cash and internal control since cash is the most liquid of all assets, a business cannot survive and prosper if it does not have adequate control over its cash.

Three different systems are being used for maintaining petty cash. 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. Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i. The person who is responsible for the recording the receipts and the payments is known as the petty cashier. Cash book is periodically made up with the bank instructions as an internal method of inspecting. The following cash book examples provide an outline of the most common cash books. Here we discuss the format of petty cash book, types of petty cash systems including the ordinary and imprest system. This is the simplest form of cash book and is used in businesses where payments are made and received mostly in cash and where usually no cash discount is received or given. A simple petty cash book is one in which there is only one amount column on its both sides with common date and particular column. The cash book is a chronological record of the receipts and payments transactions for a business.

Cash is the asset that has the greatest chance of going missing and this is why we must ensure that. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. A dual column cash book can be of two types, the one which has cash and discount columns and the other which has cash and bank columns. The pages of a cash book are vertically divided into two equal parts. If all these petty expenses are to be recorded in the main cash book. This book records all those expenses which are small in amount and which are incurred on regular basis. 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. If the chief cashier records petty expenses in main cash book then chief cashier and main cash both will be overburdened. Meaning, types and importance of petty cashbook srd law.