Petty Cash Management? How to deal with Petty Cash book?

Petty cash book is a very simple and usefull book normally maintained where imprest cash system is in place. A standard petty cash book has one column for all receipts. Payment side of the cash has many columns, first colum is used for cash while other columns are used for maintaining head of accunt wise entries. Total of each column then reflects amount of each expense incuured and cash column shows inflows and outflws of cash.

Petty cash book is extremely simple and easy to maintain. Generally a certain level of cash needs to be maintained with imprest cash system for running expenses.

The petty cash provide assistant to finance manger for the required cash for little expenditure.

And this system create the responsibilty for a person to be appointed .

Their are two ways for mantain p.cash book

Imprest and ordinary

Petty cash imprest system is an effective way to manage small day to day expenses. However, since cash is the most liquid resource of the entity, strong controls over it are necessary to avoid possible misappropriation. Following controls may be applied over petty cash:

• Petty cash must be kept at a secure place (e.g. a cash box)
• Petty cash must be locked away in a safe when not in use
• Cashier must be responsible to keep supporting invoices in respect of payments made through petty cash
• Surprise cash counts must be conducted time to time to ensure the accuracy of the cash balance stated in the petty cash register
• The amount of petty cash float should not be set too high

Since petty cash register does not form part of the double entry system, payments made through petty cash are subsequently posted into the cash ledger and the general ledger.

Its very lengthy and technical, a person have to be very financially knowledgeable and to know the nature of transaction and validity and sense of approval.

The petty cash is been used to manage the small / urgent payments without going through the detail Finance's Accounts Payable process. Under petty cash management process a fixed amount is been replenished on the1st day of the month and reversed on the last day of the month by debiting and authorizing proper accounting head.. 

To meet certain daily small expenses such as gasoline for office car or local conveyance, etc a petty cash voucher need to be signed by the receiver and specify the name, department and nature of the expenses. Head teller or an office secretary generally maintains such petty cash box and register depend on the size of an organisation.