Petty Cash is a small amount of money reserved by a company for the payment of small expenses. Petty Cash is used for urgent/unexpected expenditures. However, the amount of expenditures that can be paid using Petty Cash is limited to each bookkeeping period. In a way, Petty Cash is an unexpected financing. General expenses that are usually paid using petty cash are office supplies like printer ink, paper to print office documents, reimbursement of business travel expenses, or reimbursement of vehicle fuels.
Several particular purposes are :
- Handles any outdated office supplies but to be bought quickly.
- Entertains particular customers for preserving company image.
- Accelerates unplanned activities that important for company businesses.
Petty Cash Recording Method
1. Imprest Method
The imprest method is a method of recording petty cash with fixed funds. Usually petty cash is filled out of cash with a certain amount of money. It will be used for payment within particular time period, for example for a week or two weeks and so forth.
If there are some payments that require amount of money above that petty cash threshold, employees/departments that relate with that payment may request special treatment. They may ask budget holder to increase it only for that purposes within agreed time period.
2. Fluctuating Method
This method requires that the nominal amount of petty cash is not fixed but as required. For example, at the time of making the first policy the company set a small cash amount of $500, then used as needed and then refilled. This type of recording method is more complicated to manage. In budget perspective, accounting people needs to plan it carefully.
Imprest method is the most common method due to its simplicity.
This petty cash log template is prepared for the first method. But, it can be modified to accommodate the second method.
Petty Cash Template (1.3 MiB, 542 hits)