4. Petty Cash Book Flashcards
What is the petty cash book?
Is it a source document?
The petty cash book is the book or spreadsheet in which payments and receipts of petty cash are recorded. The petty cash book is the source document for petty cash.
How are petty cash transactions recorded?
Due to its nature, transactions involving petty cash are first recorded by hand outside of the accounting system, using a book or a simple spreadsheet.
What is the imprest system of managing petty cash?
How are expense items recorded?
Under the imprest system of managing petty cash, the amount of money in petty cash is kept at an agreed sum, the imprest amount or ‘float’.
Expense items are recorded on vouchers as they occur, so that at any time:
Cash still held in petty cash + vouchers for payments = petty cash imprest amount
How is the amount petty cash maintained?
The total float is made up regularly to the imprest amount by means of a cash payment from the bank account into petty cash.
The amount of ‘top up’ into petty cash will be the total of the voucher payments since the previous top up.
The total for each type of expenditure and the amounts withdrawn from the bank must be recorded in the accounting system.
