How Petty Cash Is Recorded?

Who is responsible for petty cash?

Usually one individual, called the petty cash custodian or cashier, is responsible for the control of the petty cash fund and documenting the disbursements made from the fund.

By assigning the responsibility for the fund to one individual, the company has internal control over the cash in the fund..

Is petty cash included in bank reconciliation?

The petty cash reconciliation process starts by counting up the amount of cash on hand at the end of the financial period and using this as the ending balance for the petty cash account. Next, receipts are reviewed and verified as appropriate and complete.

Where is petty cash recorded?

Petty cash appears within the current assets section of the balance sheet. This is because line items in the balance sheet are sorted in their order of liquidity. Since petty cash is highly liquid, it appears near the top of the balance sheet.

Is petty cash an asset?

Yes, petty cash is a current asset. A current asset is any asset that will provide an economic benefit within one year. Petty cash refers to spending cash that a company has readily available.

What is a petty cash reimbursement?

General Information. Petty cash imprest funds are provided to enable departments to make cash conveniently available for minor business expenditures. The preferred method of reimbursements is by check, requested via a properly authorized and documented check request.

How is petty cash accounted for?

Journal entry for putting money into the petty cash fund The entry must show an increase in your Petty Cash account and a decrease in your Cash account. To show this, debit your Petty Cash account and credit your Cash account. When the petty cash fund gets too low, you must refill it to its set amount.

What is petty cash and its purpose?

The purpose of a Petty Cash Fund is to allow for the reimbursement or purchase of minor, small-dollar (less than $100), unanticipated business expenses, where the use of alternative means is neither feasible nor cost effective.

How do you calculate petty cash?

Add up the total expenditure listed on each petty cash voucher in the petty cash fund (the information can also come from the petty cash book). Subtract this amount from the calculated amount of cash withdrawn. The result should be zero. If there is a residual balance, then there is a cash overage in the fund.

Is petty cash considered cash?

Petty cash or the petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check.

How much petty cash is allowed?

That depends on how many small expenses you make and how often you make them, but most businesses seem fine carrying between $100 and $200 in petty cash. Use your judgement, and put less into the petty cash fund than you think you need—you can always increase the amount later.