PETTY CASH BOOK

Petty Cash Book is the book which is used for the purpose of recording expenses involving small amounts. Besides petty expenses, receipts from main cash are recorded. Petty Cash Book is maintained by Petty Cashier and acts as the Petty Cash Account.
In a business a number of small payments, such as for conveyance, stationery, cartage, etc., have to be made. If all these payments are recorded in the Cash Book, it will become voluminous. Therefore, it is usual for firms to appoint a person as 'Petty Cashier' and to entrust the task of making small payments. Recording of Petty Cash:- Petty cash given to the Petty Cashier for small payments is recorded on the credit side of the Cash Book as 'By Petty Cash Account' and is posted to the debit side of the Petty Cash Account in the Ledger.

SYSTEM OF PETTY CASH:- Petty Cash Book may be maintained by ordinary system or by imprest system. In case of Ordinary System of Petty Cash, Petty Cashier is given appropriate amount of cash and after spending the whole of that amount, he submits the account to the Head Cashier.

Imprest System of Petty Cash :- Under this system, an estimate is made of amount required for petty expenses for a period (say for a week, a fortnight or a month). The amount so ascertained is given to the Petty Cashier in the beginning of a period. The amount paid by him during the period. Thus, he will again have the fixed amount in the beginning of the new period reimbursed. This amount is called imprest money. This system of paying advance in the beginning and reimbursing the amount spent from time to time is called imprest system.

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