![]() Moreover, it also the basis for financial statement preparation. It depends on the company policy to reconcile the petty cash, we usually reconcile at the month-end in order to ensure there is no missing cash. The total balance cannot be higher than the float limit. The cashier needs to prepare petty cash top up when the amount falls below the minimum balance. ![]() It will help to ensure that only enough balance keeps in petty cash balance. The cash needs to transfer or deposit to bank account when the balance more than the float. We can use the excel file to fill the balance or the actual book. It is the logbook that controls all movement and the balance at any specific time. The cashier can use it as the template to complete some basic information and signature of the requested person. We can use the voucher with a sequential number as the supporting reference. However, most companies assign cashier to control it. The person responsible for controlling petty cash can be various from company to company. However, we also need to consider the risk of fraud if the float amount is too high as the payment through petty cash does not go through management approval. It depends on several factors, such as the demand for petty cash during regular operation. Petty cash float is the amount which company allows the responsible person to control, and any amount over that must be deposit to the bank. ![]() If there is any variance, the responsible person must investigate. The actual cash and record must be reconciled on a regular basis. In order to prevent any risk of error, all transactions must record during the day it occurs. If the amount is significant, the cash should keep in safe and key need to separate to more than one person. The petty cash must keep in a proper locker in order to prevent any thief or miss place which can lead to the loss of company assets. Account Debit Credit Petty Cash $ 800 Cash at Bank $ 800 Internal Control for Petty Cash It will refill the petty cash balance back to $ 1,000. To record the transfer of cash from bank to petty cash: The company need to debit petty cash $800 and credit cash at bank $800. Account Debit Credit Expense $ 800 Petty Cash $ 800 The company may record expense into small chart account such as stationary, taxi and so on. These are the expenses that company paid using petty cash during the month. To record expense which paid by petty cash: The company record debit expense $ 800 and credit petty cash $ 800. After reviewed, management approves and agrees to withdraw $800 from bank to refill the petty cash balance. So she prepares to replenish report to claim $800 from the accounting department. Account Debit Credit Petty Cash $ 1,000 Cash at Bank $ 1,000 ReplenishmentÄuring the month, the cashier summary the report, and the total expense is $ 800 and the remaining balance $ 200. Company transfer cash from bank account to petty cash balance. Journal Entry: The company make journal entry by debiting petty cash and crediting cash at bank. In order to gain deep understand, please refer to the Petty Cash Book Example below: Set Up Petty Cashįor example, the company has decided to set the petty cash float of $ 1,000 and this cash is withdrawn from bank account on 01 Jan 202X. Petty Cash Book Example: Accounting Record for Petty Cash transaction This system will only allow the petty cash amount within the float amount. The replenished form should attach with the supporting documents as the top management did not approve of the individual transaction, so he needs to approve the total amount. The cashier can only spend what they have (float amount) and will claim what they already spend. At the month-end, the balance must be replenished back to the float limit. The petty cash start at any fixed balance at the beginning of the month, and it will reduce over time due to expense. Imprest system is the form of a financial accounting system which commonly use to control petty cash. And other small and urgent payments Imprest system on Petty Cash.Not all transactions are suitable with petty cash, the company should strictly allow the settlement with petty cash as follows: What kinds of transactions are suitable with petty cash? However, the amount must be within their level of approval. Accountants need to use petty cash as the suppliers do not allow to purchase on credit. The petty cash helps accountants to process some small and routine payment without authorization from top management. It is usually the cash balance that company use for expenses which require immediate payments. It is recorded in a separated chart account which enables to reconcile daily between accounting record and logbook. Petty Cash book is the book which records small cash payment and receipt during daily business operation.
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