Petty cash

Petty cash

Businesses often need small amounts of discretionary funds in the form of cash known as petty cash for expenditures where it is not practical to make the disbursement by check.

The most common way of accounting expenditures is to use the imprest system. The initial fund would be created by issuing a check for the desired amount. Usually $100 would be sufficient for most small business needs; however, larger businesses may have several thousand dollars in discretionary funds available as petty cash. The entry for this initial fund would be to debit Petty Cash and credit cash.

As expenditures are made, the custodian of the fund will reimburse employees and secure a petty cash voucher in return. At any given time the total of cash on hand plus reimbursed vouchers must equal the original fund.

When the fund gets low the custodian submits the vouchers for reimbursement. Assuming the vouchers add up to $80 and that the majority of expenditures were for office supplies, an $80 check is issued and an $80 debit towards office expenses is marked. Once the check is cashed, the custodian has cash at the original amount.

Oversight of petty cash is important because of the potential for abuse. Examples of petty cash controls include a limit (such as 10% of the total fund) on disbursements and monthly audits by someone other than the custodian. Use of petty cash is sufficiently widespread that vouchers for use in reimbursement are available at any office supply store.

External links

* [http://www.pettycashcontroller.com/pcguide.htm The Best Practice Guide to Managing Petty Cash]


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  • Petty cash — Petty Pet ty, a. [Compar. {Pettier}; superl. {Pettiest}.] [OE. petit, F. petit; probably of Celtic origin, and akin to E. piece. Cf. {Petit}.] Little; trifling; inconsiderable; also, inferior; subordinate; as, a petty fault; a petty prince.… …   The Collaborative International Dictionary of English

  • petty cash — n. a cash fund for small incidental expenses …   English World dictionary

  • petty cash — n [U] a small amount of money that is kept in an office for making small payments …   Dictionary of contemporary English

  • petty cash — noun uncount a small amount of money in coins or bills that a business or organization keeps available to pay for small things …   Usage of the words and phrases in modern English

  • petty cash — ► NOUN ▪ an accessible store of money for expenditure on small items …   English terms dictionary

  • petty cash — a small amount of money kept for minor purchases for the business, which do not warrant writing a cheque. Glossary of Business Terms * * * petty cash petty cash ➔ cash1 * * * petty cash UK US noun [U] ► MONEY, WORKPLACE a small amount of money… …   Financial and business terms

  • petty cash — The amount of cash that an organization keeps in notes or coins on its premises to pay small items of expense. This is to be distinguished from cash, which normally refers to amounts held at banks. Petty cash transactions are normally recorded in …   Accounting dictionary

  • petty cash — The amount of cash that an organization keeps in notes or coins on its premises to pay small items of expense. This is to be distinguished from cash, which normally refers to amounts held at banks. Petty cash transactions are normally recorded in …   Big dictionary of business and management

  • petty cash — noun a small fund of cash that a firm keeps for the payment of incidental expenses • Hypernyms: ↑fund, ↑monetary fund * * * noun [noncount] : a small amount of money that is kept in an office in order to pay for small items * * * ˌpetty ˈcash… …   Useful english dictionary

  • petty cash — Small amounts of *cash (definition 1) kept for minor, day to day expenses. Although not *material, *internal controls over petty cash tend to be strong in most organizations. Typical controls include (i) a secure storage location, (ii) the *… …   Auditor's dictionary

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