Analytical petty cash book or columnar petty cash book is different from the simple petty cash book in the sense that in this type of petty cash book, an analytical presentation of cash payment is made. In big business apprehensions, the petty cash book is maintained in analytical form, with a detached column for each standard item of expense and a column for. Recording in a petty cash book does not require formal knowledge of accounting principles and techniques. The double column cash book also known as two column cash book has two money columns on both debit and credit sides one to record cash transactions and one to record bank transactions. It is also called as analytical petty cash book, as it analysis the payments under different heads separately. General cash book is subdivided in the single column, double column, and treble column cash book. In other words, we can say that if we add a bank column to both sides of a single column cash book, it would become a double column cash book. Uses of petty cash book its a cash book used to enter daily petty expenses. This type of cash book usually uses the imprest system. Recording of transaction in cash book and journal with specimen. The primary bookkeeping record in singleentry bookkeeping is the cash book, which is similar to a checking account register in uk. Ncert solutions for class 11 financial accounting recording. Petty cash count and cash certificate for the year end balance of cash in hand.
In such a cash book there are preexisting columns for the usual expenses that recur quite frequently for an organization. The voucher would show the date, amount, recipient, purpose and general ledger account. Like columnar petty cash book, it also contains many money columns in the credit side and one money column in the debit side and a particular column and a date column are also similar to that of the columnar or analytical petty cash book. Explanation of columns in the analytical petty cash book. One major advantage of this system is that it saves time. If there is a residual balance, then there is a cash overage in the fund. In an analytical petty cash book, there exists separate heads for different petty expenses, which makes recording much easier. Mar 25, 2018 simple petty cashbook example solution 2. In module 12, which covered the bank cash book, the advantages of paying all cash and cheques into the bank intact were evident. Mar 04, 2017 this is a video tutorial to explain how to use our free petty cash template1 which can be downloaded from. It is another cash book which is maintained, generally, in large business. Petty cash is the small cash reserves that businesses keep on the. At the end of the month petty cash book receipt and payment column is totaled and balanced here total payments are balance cd i.
The ruling of analytical petty cashbook is given below. The main advantages of petty cash book publish your article. Separate account records are maintained for petty cash, accounts payable and receivable, and other relevant transactions such as inventory. Considered as the most beneficial method of recording petty cash payments. In a business operating this type of cash book, small cash payments are usually made out of petty cash. Double column cash book explanation, format, example. Petty cash book makes possible for making comparison of the petty expenses between two periods and helps in controlling such petty expenses more effectively. As head cashier checks the accounts of previous month and gives advance for the coming month, thus, errors if any are reduced. 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. However, there are many times that businesses deal with such small amounts that. Subsequent position of cheques that were not cleared in the year end. Major l earnings outcomes preparation of petty cash book in this video ive explained about petty cash book which is a ledger kept with the. Other than the normal petty cash book, which resembles a normal cash book, there are two other types of petty cash books.
The analytical petty cash book and the imprest system. The petty cash book will be maintained by a separate cashier known as petty cashier in the accounting field. It also saves time posting each item of petty payments unnecessarily in the ledger. Petty cash book definition, types, format, examples. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and.
This type of petty cash book is known as analytical petty cash book. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. Petty cash book format example definition explanation. The petty cashier of john and james company paid cash for the following expenditures during march 2018. Account definition in terms of accounting qs study. The account is an outline of pertinent business transactions at one place relating to a person, asset, expense or profits named in the heading. In this column, the date of receiptpayment of cash is recorded. In simple petty cash book there is one column each for recording of receipt of cash from the main cashier and for payment of petty expenses. A column for sundries is usually added for miscellaneous payments. Petty cash is a small reserve of cash kept onsite at a business location for incidental cash needs. In a business a number of small payments, such as for stationery, telegrams, taxi fare, cartage etc have to be. To analyzing the individual payments you have to just total individual expenses columns. Compile a cash book with cash and bank columns from the following transactions. Money received from head cashier is recorded on debit side and payments are recorded on credit side.
How the imprest system of petty cash book works your. While recording the transactions in petty cash book if all the expenses are analyzed and entries are recorded in cash book on the basis of this. The analytical cash book is a book kept by a petty cashier. Petty cash book is a cash book in which the petty cashier records petty cash. Petty cash book explanation, format, example, ordinary. A petty cashier makes a detailed analysis of petty payments and records under suitable heads, i. Meaning of petty cash book, its importance and advantages.
Uses of petty cash book its a cash book used to enter daily petty expenses like cost of stationery, postage and xerox copy and so on. Many expenses of small nature are recorded in petty cash book. In the analytical version, a separate column is used for. Petty cash book is maintained by the petty cashier. Analytical and imprest system of petty cash book your article library. 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.
Generally petty cash book is maintained on imprest system. What is the importance of petty cash in a business. The initial fund would be created by issuing a cheque for. Petty cash book explanation, format, example, ordinary and. While recording the transactions in petty cash book if all the expenses are analyzed and entries are recorded in cash book on the basis of this analysis such petty cash book is called analytical petty cash book.
In almost all businesses, it is found necessary to keep small sums of ready money with thecashier or petty cashier for the purpose of meeting small expenses such as postage, telegrams, stationary and office sundries etc. Petty cash book can be maintained either in a simple or in analytical way. The format of the analytical petty cash book is as under. Petty cash is also the title of the general ledger current asset account that reports the amount of the companys petty cash. As only totals of various columns are to be posted in the. Single column cash booksimple cash bookwith solved. Petty cash book introduction cash book accounts class 11 duration. Petty cashier is a person, who maintains the petty cash book. Totals are carried forward from page to page until the end of the periods. This type of cash book will allow managementproprietors to tell at a glance the total amount spent on each of these common expenses. Cash book contains cash transactions passing into and out of a business. The format of a petty cash book is simple and involves the details discussed below. Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i.
These small expenditures are usually paid using coins and currency notes rather than checks. How to prepare analytical petty cash book in excel spread sheet. The credit side consists of several analysis columns. Petty cash book allows periodical totals, therefore, saving on time. The imprest system is designed to provide a rudimentary manual method for tracking petty cash balances and how cash is being used. The intent of this activity is to see if there have been any undocumented disbursements. Thus, the book is part of a manual recordkeeping system. Sep 28, 2019 in an analytical petty cash book, there exists separate heads for different petty expenses, which makes recording much easier. Petty cash book is a type of cash book that is used to record minor regular. Nov 27, 2019 the imprest petty cash system is a method of accounting for petty cash expenses. Analytical petty cash book or columnar petty cash book i. Let us learn about the petty cash book and the various systems of maintaining. Definition and explanation of cash book format, advantages.
A petty cash is a cash book used to enter all small or petty expenses obtained. The additional analysis columns are used to analyze expenditures as they arise. Under the system, the petty cash fund balance is always maintained at a fixed amount decided on when the fund is first established. These are expenses which are incurred day after day. Nov 01, 2014 cash book single column cash book or simple cash book in very simple method. In large business concerns, the petty cash book is maintained in columnar or analytical form, with a separate column for each usual item of expense and a column for total. One of the total payment column and second in one of the analytical amount columns. How to analyze petty cash with excel petty cash template 1. This kind of petty cash book is known as analytical petty cash book. The book in which all cash transactions either cash is received or paid are primarily recorded according to dates, is called cash book. Jul, 2019 the imprest system is an accounting system for paying out and subsequently replenishing petty cash. 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. A petty cash book is a record of smallvalue purchases before they are later transferred to the ledger and final accounts.
Before the rise in the use of credit cards and charge cards, nearly all companies used petty cash accounts to allow employees responsible for purchasing small supplies to do so with minimal hassle. Improves employee accountability on business resources. Petty cash book maintains records of all petty payments systematically. Analytical and simple petty cash books are reliable in monitoring how small transactions routinely take place in a business. Petty cash book definition, types, format, examples imprest and. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and postage.
The imprest petty cash system is a method of accounting for petty cash expenses. Cash book contains individual columns for each expense every small payment is recorded on the credit side. During an accounting period petty cash is used to pay cash expenses which are supported by petty cash vouchers. In accounting, cash is the main account when dealing with the inflow and outflow of money in a business. For smallscale business, simple petty cash book is sufficient but on a medium or large scale business number of petty expenses increases hence it is desirable. Also, since most petty cash custodians are not trained as accountants, they may incorrectly record disbursements.
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. Petty cash not important a book of original entry, where small, usually insignificant amounts of money are recorded. Under the system, the petty cash fund balance is always maintained at a fixed amount decided on when the fund is first established during an accounting period petty cash is used to pay cash expenses which are supported by petty cash vouchers. 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. Petty cash book meaning, cash book vs petty cash book. There might be a petty cash drawer or box in each department for. Add up the total expenditure listed on each petty cash voucher in the petty cash fund the information can also come from the petty cash book. A petty cash book is a book of vouchers which are prepared each time a disbursement is made from petty cash. Recording in petty cash book saves time and efforts of the chief cashier. The petty cash book is ruled in the form of the single column cash book with an amount column and addition oat columns for the more usual classes of expenditure. In most cases, the petty cash book is an actual ledger book, rather than a computer record.
There are two primary types of entries in the petty cash book, which are a debit to record cash received. It is the most advantageous method of recording petty cash payments. 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. When petty expense is recorded in total payment column, the same amount is recorded in the relevant petty expense column. An analytical petty cash book is employed by a large concern having a number of transactions of petty amount such petty. It is both a book of original entry as well as a book of final entry. Definition of an account is proof in the general ledger that is used to accumulate and store debit and credit amounts. 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. Write out an analytical petty cash book from the following transactions. In big business apprehensions, the petty cash book is maintained in analytical form, with a detach column for each standard item of expense and a column for total. All petty payments are to be classified into different heads and different columns are maintained. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. Such disbursements are a common problem in petty cash, where there is a high risk of fraud. Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check.
Petty cash book explanation, format, example, ordinary and imprest. Subtract this amount from the calculated amount of cash withdrawn. 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, because of the inconvenience and costs of writing, signing, and then cashing the cheque the most common way of accounting for petty cash expenditures is to use the imprest system. Also, it will facilitate the accountant or the organization to. Sep 28, 2015 petty cash count and cash certificate for the year end balance of cash in hand. For this purpose, a petty cashier is appointed by the chief cashier. In large business concerns, the petty cash book is maintained in columnar or analytical form, with a separate column for each usual item of expense and a column. Petty cash book can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal. What are the nature of transactions that are recorded in the petty cash book. For smallscale business, simple petty cash book is sufficient but on a medium or large scale business number of petty expenses increases hence it is desirable to have the separate record for each type of petty expenses.
How the imprest system of petty cash book works your business. See this link to watch accounting classes for class 11. In this book, separate columns are provided for usual head of expenditure. Imprest system of petty cash is a system where the petty cashier is given a lump sum in cash often called a float keeping in view the possible needs of the business to meet its petty expenses for a stated period, e. Importance and advantages of petty cash book business performing a large number of petty transactions usually maintain a separate petty cash book. At the end of the period a petty cash reconciliation is carried out. In this type, a separate column for each petty expense is provided on credit side. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. The analytical petty cash book and the imprest system ppt video. All cash transactions are primarily recorded in it as soon as they take. The keeping of the book is not different from the keeping of the main cash book the amount paid out by the chief cashier is credited in his cash book to complete the double entry. Recording of transaction in cash book and journal with. Petty cash book supplies information regarding petty payments made on different heads more easily and quickly.
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