PETTY CASH BOOK

A petty cash book is a cash book used for recording small or minor expenses of the business.

Petty means small, the minor expenses may include postage stamp, carriage, telegram, stationary, telephone, envelopes, etc.

To establish the petty cash an amount called cash float is disbursed to the petty cashier at the beginning of a month, the cash floor is credited to the main cash book while the petty cash book is debited.

The keeping of the petty cash book is the responsibility of the petty cashier who is supervised by the main cashier.

The petty cashier is – reimbursed at the beginning of another month to make up the cash float.

The Need for keeping Petty Cash Book is:

•           The time wasted posting the minor expenses to the ledger is saved
•           Petty cash book reduces the burden of the major cash book

Differences between cash book and petty cash book

Form of a petty cash book

Example:

Enter the following into the petty cash book showing the analysis column for postage, traveling expenses, stationery, carriage, and sundry expenses.

May 1          Petty cash in hand                           2,000

May 3          Paid for postage stamp                   150

May 5          Paid for travelling expenses            700

May 6          paid for stationery                          500

May 10        Paid for carriage                             100

May 20        Paid for sundry expenses                100

May 22        Paid for stationary                          200

Petty Cash Book

Class Work

Enter the following transaction into a petty cash book with these headings. Postage and stationery, traveling expenses, carriage, and office expenses.

Jan 1            Petty cash in hand                           3000

Jan 2            Bought stamp                                  500

Jan 4            Travelling expenses                         300

Jan 8            Bought stamp                                  200

Jan 10          Paid carriage                                   100

Jan 12          Repairs of office equipment           500

Jan 15          Bought envelope                             150

Jan 25          Paid office cleaner                          200