What is a Petty-Cash Book?

A petty cash book is used for recording and tracking small purchases such as parking meter fees that aren’t suitable for check or credit card payments. It is a ledger kept with the petty cash fund to record amounts that are added to or subtracted from its balance. Petty cash should be part of an overall business accounting system that documents how your business moves funds between one account and another and how it spends its money.

In other words, a petty cash book is an accounting book used for recording expenses which are small and of little value, for example stamps, postage and handling, stationery, carriage, daily wages, etc. These are expenses which are incurred day after day; usually petty expenses are large in quantity but insignificant in value. To record such expenses, a different book known as a petty cash book is maintained. The petty cash book may be maintained by the ordinary or by the imprest system.

The petty cash book is the book for recording small disbursement, the rational behind the system is to reduce the numerous cash payment for small expenses. The general system adopted for the recording of item in the petty cash book is refer to as ”the imprest system”in this system a specified sum is given to the petty cashier at the start of the accounting,this amount is called the”float”this amount should be sufficient to cover the estimated petty cash book expenditure for stated period. The petty cashier must be reimbursed at regular interval .

The petty cash book is a double entry book and must be included in the trail balance.the maximum level of cash held in the petty cash book is fixed and the cashier must be reimbursed for amount he has paid out.the source document for the petty cash book is the petty cash expenses voucher …

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JSS2 Business Studies Third Term: Imprest and Petty Cash Book