Petty Cash Book

Subject: Accountancy

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Overview

All petty expenses are paid through petty cash fund and their records are made in a separate book, which is known as petty cash book. Hence, the petty cash book is one in which all small items of expenses are recorded in a systematic manner made through petty cash fund. This note has information about petty cash book.
Petty Cash Book
Petty Cash Book
Petty Cash Book
A cash book which is created for the small payments of an organization i.e. taxi fare, bus fare, carfare, postage and stamps, stationary wages tea and coffee etc. It is established in the responsibility of petty cashier who maintain a separate cash book to record, suchsmall payments only. The petty cashier may operate the fund either on the ordinary systems or impress systems of petty cash book.

Importance and Advantages

The advantages and importance of the petty cash book are as follows: -

  1. It makes records of all petty expenses are payments systematically.
  2. It reduces the use of cheques and also avoids the inconvenience of issuing cheque for small payments maximum 500rupease.
  3. It helps in making the records of cash transactions up-to-date because of division of labour in recoding cash transactions.
  4. It provides information regarding petty payments made on different heads more easily and quickly.
  5. It helps to control petty expenses more effectively by comparing of petty expenses between one and two period.


Petty Cash Book/ Account (AGF No. 22)

The form is designed under the AGF No. 22. The specimen of petty cash book/ account is as follows: -

Specimen of Petty Cash Fund
Specimen of Petty Cash Fund

Explanation of the above columns

S No.

Column

Explanation

1.

Date

The date of transactions is written.

2.

Particulars

The transactions relating to reimbursement and petty expenses are written.

3.

JV No.

The number of journal voucher/ cash payment slip relating to petty expenses is written.

4.

Debit Amount

The amount received as petty cash is written.

5.

Credit Amount

The amount of petty expenses is written.

6.

Dr./ Cr.

The word Dr. indicating the petty cash fund balance after each entry is written.

7.

Balance Amount

The balance amount of petty cash fund is written.

Things to remember
  • All petty expenses are paid through petty cash fund and their records are made in a separate book, which is known as petty cash book.
  • The petty cash book is one in which all small items of expenses are recorded in a systematic manner made through petty cash fund.
  • Petty cash book is a book, which is maintained by a petty cashier to make a record of petty expenses made through petty cash fund.
  • The form of petty cash book is designed under the AGF No. 22.
  • It includes every relationship which established among the people.
  • There can be more than one community in a society. Community smaller than society.
  • It is a network of social relationships which cannot see or touched.
  • common interests and common objectives are not necessary for society.
Questions and Answers

All petty expenses are paid through this fund and their records are made in a separate book, which is known as petty cash book.

A government office performing a large number of petty transactions usually maintains a separate petty cash book because of the following advantages: -

  1. It makes a record of all petty payments systematically.
  2. It supplies information regarding petty payments made on different heads more easily and quickly.
  3. It makes a comparison of the petty expenses between two periods and helps in controlling such petty expenses more effectively.
  4. It reduces the burden of the main cashier as he is not required to handle petty transactions.
  5. It helps in making the bank cash book more informative, clean and clear.
  6. It helps in making the records of cash transactions up-to-date because of a division of labour in recording cash transactions.

Any two importance of petty cash book are as follows:

  1. It makes a record of all petty payments systematically.
  2. It supplies information regarding petty payments made on different heads more easily and quickly.
Quiz

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