What is the petty cash book

For accounting and tax purposes, businesses should keep track of all of the money they spend and all of the money they take in. Check and credit card purchases make it easy for you to do this because they are tallied on monthly statements. A petty cash book is a way for your company to keep track of small cash purchases that do not appear on either your bank or credit card statements.

 What is a Petty Cash Fund?

 Set up your petty cash fund with an amount of cash that will cover several weeks' worth of minor business purchases, such as stamps or copying costs. Withdraw the money for your petty cash fund from the bank using a check made out to "cash." This gives you a written record of how you originally acquired the money that goes into your petty cash fund. Keep your petty cash fund in a locked box that contains the money as well as a petty cash book to record transactions.
   

 How Do You Use a Petty Cash Fund?

 Use your petty cash fund for purchases that are not appropriate for either check or credit card transactions. Spend this money at venues such as farmers' markets,where many vendors do not accept credit cards, or for small purchases for items you overlooked when placing your regular orders. Set yourself a maximum amount for individual petty cash purchases, such as $5 or $10. You do not need to strictly adhere to this limit, but it will be useful as a guideline. Always keep petty cash money separate from other cash and replace any change you receive. If you do receive a receipt for a petty cash purchase, keep it in an envelope with your petty cash book.

What is a Petty Cash Book?

 A petty cash book is a journal for recording your petty cash purchases. Start your petty cash book by noting the amount of cash you are putting in the fund initially, as well as the date you set the funds aside. Note the amount that you withdraw each time you take out money, as well as where you spent the funds and what you purchased. Also include the date when you made the transaction. Subtract the amount you spent from the running total. The resulting number should match the amount of cash remaining in the fund.
    

How Do You Account For Your Petty Cash Book In Your Bookkeeping?

Your petty cash book is an important bookkeeping record, providing a record of transactions that may otherwise provide no receipt. Refer to your petty cash book when you compile your ledger listing your business purchases and allocating them by category, such as materials or supplies. When you have filled your petty cash book, file it with other bookkeeping records such as bank receipts and purchase invoices, and start a new petty cash book for your fund.