Then, create another journal entry debiting the petty cash account and crediting the cash account. A cash book is used to record the transactions immediately. Petty cash book can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal expenditures of the business which is not related to the direct line of the business. For example, employees cannot use petty cash to buy themselves coffee. Petty cash is stored in a petty cash drawer or box near where it is most needed. Journal entry for removing money from the petty cash fund. C or cb cash book, j journal, pc petty cash book etc.
We have covered introduction to double entry system, journal, ledger. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and postage. When the petty cash fund gets too low, you must refill it to its set amount. A petty cash book is just another kind of cash book that records petty cash transactions. This video describes how to set up a petty cash fund and how to reimburse it once it has been used. Small or large companies maintain 2 types of petty cash book for all cash.
The most common examples are the single, two and three column cashbooks, however, it is possible to have multicolumn cash books, such as the petty cashbook, which can be used to provide further analysis of receipts and payments. 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. Petty cash, also known as imprest cash, is a fund established for making small payments. This journal entry, in essence, subdivides the petty cash portion of available. A cash book acts like both a journal and a ledger for cash transactions. The petty cash book generally has a number of columns for the amount on. For example, imagine that the galaxys best yogurt runs out of milk one evening. Petty cash meaning, examples accounting for petty cash. Petty cash book format example definition explanation.
Examples of petty cash book, learn the basics of accounting process. You or your petty cash cashier must also create journal entries showing what petty cash funds go toward. We have covered introduction to double entry system, journal, ledger, trial balance, subsidiary books, cash book and petty cash. If any alteration of established petty cash fund is not required, the new journal. Examples of these payments are office supplies, cards, flowers, and so forth. The petty cashier of john and james company paid cash for the following expenditures during march 2018. 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. Petty cash accounts are managed through a series of journal entries. Examples of petty cash bookjournal cash book ca cpt.
At the same time, it is also a ledger since purely cash transactions are posted in it similar to a cash account in a ledger. Generally a columnar petty cash book is used in which different columns are provided for different petty expenses. A person who is in possession of the cash in the organization is generally called cashier. The same person is responsible for the appropriate accounting of each cash transaction done through him. Types of petty cash book in accounting with diagrams and examples. The credit side consists of several analysis columns. Petty cash book explanation, format, example, ordinary and imprest.
Examples include receipt books, cheque butts, vouchers etc. Examples include postage due, reimbursement to employees for small. It is an accounting book used for recording expenses which are of small and of little value. Examples of petty cash bookjournal cash book ca cpt cs. All the incomes and expenses which are practically not possible to settle. Journal is an integral part of bookkeeping which is the starting point of accounting and it records all the business transactions whereas the petty cash book records the transaction related to the cash account. A petty cash is a cash book used to enter all small or petty expenses obtained. Define the purpose and use of a petty cash fund, and prepare. Every payment made by the petty cashier is entered on this side. Knowing about the essential characteristics of a general cash book will help us to understand more about it. Journal is an integral part of bookkeeping which is the starting point of accounting and it records all the business transactions whereas the petty cash book.