Petty Cash Book

Key Highlights

• A petty cash book is a manual or digital record of small, routine cash transactions in a business.

• It tracks payments made for low-value expenses like office supplies, courier charges, or petty meals.

What is Petty Cash Book?

A petty cash book is a manual or digital record of small, routine cash transactions in a business. It tracks payments made for low-value expenses like office supplies, courier charges, or petty meals.

Petty Cash Example

• Purchasing pens, paper clips, and staplers for the office.

• Paying for courier charges for urgent document delivery.

• Reimbursing employees for small, out-of-pocket expenses.

Petty Cash Book Format

1. Date of transaction

2. Description of expense

3. Payment amount

4. Running balance (beginning balance + payments - receipts)

Types of Petty Cash Book

1. Imprest System: A fixed amount is periodically replenished to maintain a constant balance. This simplifies reconciliation and reduces the risk of fraud.

2. Ordinary System: The petty cash fund is replenished only when it's depleted. This requires more frequent monitoring and accounting work.

Benefits of Petty Cash Book:

• Simplifies handling small expenses.

• Reduces reliance on corporate credit cards or checks.

• Improves expense tracking and accountability.