Petty Cash Book is the book which is used for the purpose of recording expenses involving small amounts. Beside petty expenses, receipts from main cash are recorded. Petty Cash Book is maintained by Petty Cashier and acts as the petty cash account.
Petty cash book may be maintained by the ordinary system or by imprest system.
Ordinary System: Petty cashier is given the appropriate amount of cash and after spending the whole of that amount, he submits the account to the head cashier.
Imprest System Of Petty Cash: Under this system, an estimate is made of the amount required for petty expenses for a period (say a week, a fortnight, or a month). The amount so ascertained is given to the Petty cashier in the beginning of a period. The amount paid by him during the period. Thus he will again have the fixed amount at the beginning of a new period reimbursed. The amount is called imprest money. This system of paying advance in the beginning and reimbursing the amount spent from time is called imprest system.
A petty cash book is one in which all petty or small payments made through petty cash fund are recorded systematically. Petty cash book is maintained by the petty cashier. Petty cash book can be maintained either in a simple or in an analytical way.
Simple way of maintaining petty cash records in Imprest System.
A simple petty cash book is one in which there is only one amount column on its both sides with common date and the particular column. The debit column is used for entering the balance of cash in the hand of the petty cashier at the beginning of the period and the amount received from the head cashier. The credit amount column is used for entering the petty payments in order of date. It is balanced like a ledger account.
Analytical way of maintaining petty cash records in Imprest System.
An analytical petty cash book is one in which there is one amount column on its debit side and a number of columns on its credit side for different heads of expenses. Since the petty cash book analysis, the expenses into a number of heads of expenses, the name given to it is analytical petty cash book. Each payment is recorded on it twice, one on total amount column and next on individual expense column. In fact, it is an extension of the simple petty cash book. The total amount column is balanced and individual expense columns are totalled.
