Petty Cash Book

What is Petty Cash Book?

A petty cash book is a manual or digital record of small, routine cash transactions in a business. It tracks payments made for low-value expenses like office supplies, courier charges, or petty meals.

Petty Cash Example:

  • Purchasing pens, paper clips, and staplers for the office.
  • Paying for courier charges for urgent document delivery.
  • Reimbursing employees for small, out-of-pocket expenses.

Petty Cash Book Format

  1. Date of transaction
  2. Description of expense
  3. Payment amount
  4. Running balance (beginning balance + payments - receipts)

Types of Petty Cash Book

  1. Imprest System: A fixed amount is periodically replenished to maintain a constant balance. This simplifies reconciliation and reduces the risk of fraud.
  2. Ordinary System: The petty cash fund is replenished only when it's depleted. This requires more frequent monitoring and accounting work.

Benefits of Petty Cash Book:

  • Simplifies handling small expenses.
  • Reduces reliance on corporate credit cards or checks.
  • Improves expense tracking and accountability.

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