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.
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To establish the petty cash an amount called cash float is disbursted to the petty cashier in 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 re – imbused in the beginning of an other month to make up the cash float.
The Need for keeping Petty Cash Book are:
- 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
|Cash book||Petty cash book|
|It has many sources of receipt||It has only one source which is cheque drawn from the bank|
|It records the major items of cash transactions||It records the minor items of transaction|
Form of a petty cash book
|Receipt||F||Date||Voucher No||Total expenses||Traveling expenses||Portage stamp||Statio-|
Enter the following into the petty cash book showing the analysis column for postage, travelling 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
|Receipt||F||Date||Details||Voucher||Total expenses||Postage stamp||Trade expenses||Stationary|
Enter the following transaction into a petty cash book with these headings. Postage and stationery, travelling expenses, carriage, 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