Chapter 10 Maintaining Petty Cash Records

Jul 17, 2026

Uploaded by Violet

Petty cash is used for small, occasional business expenses that must be paid in cash, such as transport fares and minor office purchases. The chapter explains why cash spending requires tight control to reduce theft risk and to ensure accurate recording. It details how petty cash operates in a three-step cycle: employee payment, submission of a petty cash voucher with receipts, and recording the expense in the organisation’s ledger. It also covers documentation, unique voucher numbering, dating, signatures, and a policy-based authorisation procedure with checks against validity and cash limits. Supporting evidence includes receipts, bus tickets, and proper sales tax receipts so tax can be reclaimed and amounts are recorded correctly.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages20

Reading Time50 min

AccessFree to download

Chapter 10 MAINTAINING PETTY CASH RECORDS Most business expenditure is paid for out of the business bank account, by cheque, BACS transfer, direct debit, or other payment methods. Occasionally, however, small items of expense need to be paid for in cash. Cash might be needed for bus fares, for example, or to buy a packet of biscuits for the office from the local shop. Spending by cash has to be controlled carefully, to prevent theft, and properly recorded. This chapter explains the nature of petty cash, how petty cash systems are organised and operated and how expense items are recorded in the accounting system. It covers the syllabus area of maintaining petty cash records. | CONTENTS
1 Operation of petty cash
2 Documentation
3 Authorisation
4 Security of cash
5 Queries and problems
6 Manual petty cash book
7 Imprest and non-imprest methods
8 Petty cash reconciliation | | --- | | LEARNING OUTCOMES
At the end of this chapter, you should be able to:
recognise the types of transaction likely to be paid out of petty cash account for petty cash using imprest and non-imprest methods
exercise control over petty cash and recognise how control can be maintained record petty cash claims
reconcile the petty cash to cash in hand. | 1 OPERATION OF PETTY CASH 1.1 HOW PETTY CASH WORKS The way the petty cash system of an organisation works is usually as follows: Step 1 An employee personally pays for a business expense, such as coffee for the office or a taxi fare to a meeting, and obtains a receipt for the payment. Step 2 The employee then reclaims the expense from the organisation through the petty cash system, by signing a petty cash voucher and handing over the receipt for the money spent. Step 3 The expense must be recorded as a business expense in the ledger accounts of the organisation. This process is explained later. 2 DOCUMENTATION To ensure that the petty cash system is not abused and that payments are made only for valid business expenses, there must be some system of authorisation for petty cash claims. In addition, for accounting purposes, all payments out of petty cash must be properly documented. 2.1 PETTY CASH VOUCHERS The initial record of any petty cash claim is a petty cash voucher. Blank petty cash vouchers are obtainable from stationery suppliers in pads, and each voucher is torn off the pad when it is used. An example of a blank voucher is shown below: | Petty Cash Voucher No.
Date | | | | --- | --- | --- | | AMOUNT
For what required $ ¢ | | | | | | | | Signature Authorised | | | Notes on filling in a voucher • Petty cash vouchers should be given a unique identification number. For control purposes, they should be numbered sequentially by the person in charge of petty cash. • Each voucher should be dated (with the date it is filled in and authorised) . • The details of the expenditure and the amount should be entered. If there is a receipt,

Jul 17, 2026

Uploaded by Violet