SECTION 3: BOOKS OF

ORIGINAL ENTRY

Petty Cashbook
Objectives
1. Identify the source documents used when recording petty cash
transactions.

2. Prepare a petty cash book with analysis columns using the imprest
system.

3. Post the details recorded in the petty cash book to general ledger
and purchases ledger accounts, including the use of folio
references.
 The Petty Cash Book
Petty cash book is a book of original entry used for recording small cash
payments with information taken from petty cash vouchers. The petty cashier
often has a float (called an imprest) to used for these payments. Small cash
payment and receipts can be omitted from the Cash Book to avoid
overcrowed. When this is done, a Petty Cash Book is used. The format of the
Petty Cash Book facilitates the analysis of transactions so that certain types of
transactions can be posted in aggregates to the ledger. The debit side of the
Petty Cash Book represents receipts whilst the credit side, which represents
payments, is divided into several analysis columns.
 PETTY CASH BOOK
Receipts Date Particulars Voucher No. Total Travelling Postage Stationery Office
Expenses

                 
                 
 How are petty cash transactions recorded?
o Step 1
Receiving the float. The petty cashier receives the float/imprest in the form of cash or perhaps a cheque
that needs to be cashed. The double-entry record require is:
Debit the petty cash account
Credit the cash or bank column in the main cash float.
o Step 2
Recording a petty cash payment. Using information shown on each petty cash voucher, the petty cashier
makes the following record in the petty cash book:
 Credit the petty cash account
Make a second entry in the appropriate analysis column.
oStep 3
Balancing the petty cash book. The petty cash account is balanced in the usual way and
the balance brought down to start the next period. At this point, the petty cashier needs
more cash to cover the next period’s cash payments. The petty cashier is reimbursed for
the last period’s payments and debit the petty cash account with the amount received. By
receiving back exactly what was spent in the previous period, the float/imprest is restored.

oStep 4
Totalling and posting the analysis columns. Finally, the analysis columns are totaled and
each total is posted to the relevant ledger accounts. Usually these postings are to expense
accounts, but in some cases it is possible that an account payable is paid in petty cash
because only a very small amount is due.
Key terms
Petty cash
Petty cash is small cash payment.

Imprest
Imprest is the maximum amount that the petty cashier is allowed to
handle at any given time. It is sometimes called float.
Imprest system
A system where a refund is made of the total paid out in a period.

Petty cash voucher

The source document for each petty cash payment.

Analysis columns
In a petty cash book the analysis columns means classifying each
payment to provide totals to be posted to the general ledger accounts.
Class activity
◦ Exercise 19. 3 x from your textbook
THE END