Petty Cash Book
A petty cash book is a ledger that is used to record and track all the petty cash expenses. It’s a physical or digital record where all petty cash transactions are chronologically listed. This helps in maintaining control and transparency over small cash expenditures.
In a typical petty cash book, the following details are usually recorded:
- Date: The date on which the petty cash was disbursed.
- Details/Particulars: A brief description of the transaction. This could include the purpose of the transaction and the name of the person who received the cash.
- Receipt Number: A reference number for the receipt that corresponds to the transaction. This ensures each transaction can be matched with a physical receipt.
- Amount: The amount of money disbursed in the transaction.
When the petty cash fund is replenished, the total of the expenses recorded in the petty cash book should equal the amount of cash that was removed from the fund. The remaining cash in the fund plus the total of the recorded expenses should equal the original amount of the petty cash fund.
Keeping a petty cash book allows a business to keep track of small expenses and ensure they are recorded and accounted for in the business’s financial records. It also helps in auditing and controlling the cash expenses, thus reducing the risk of theft or misuse of funds.
Example of a Petty Cash Book
Let’s create a simplified example of a petty cash book:
| Date | Details/Particulars | Receipt Number | Amount ($) |
|---|---|---|---|
| 07/01/2023 | Office supplies – John | 001 | 30 |
| 07/05/2023 | Postage – Mary | 002 | 20 |
| 07/10/2023 | Office lunch – Team | 003 | 50 |
| 07/15/2023 | Taxi fare – Anna | 004 | 15 |
| 07/20/2023 | Refreshments – Meeting | 005 | 25 |
| 07/25/2023 | Cleaning supplies – Bill | 006 | 10 |
| Total | 150 |
In this example, the petty cash book shows that $150 has been spent during July 2023 on various expenses, with each transaction detailed in the ledger. The details include the date, a description of the transaction, the receipt number, and the amount spent.
At the end of the month, or when the petty cash needs to be replenished, these records would be used to account for all the money spent. The total expenses ($150) would be deducted from the original amount in the petty cash fund.
If the original fund was $200, there should be $50 remaining. If there isn’t $50 left, it indicates there might be a problem such as a missing receipt, an error in the bookkeeping, or potential theft. That’s why it’s important to maintain a petty cash book—it helps ensure that all the petty cash transactions are accounted for accurately.
