The main advantages are: Reduction in numbers of transactions: Many expenses of small nature recorded in petty cash book, the number of transactions is reduced in the cash. Reduction of errors: As head cashier check the accounts of previous month and gives advance for the coming month, does, errors if any are reduced.
What are the disadvantages of petty cash book?
Disadvantages of Petty Cash Book
- Petty Cash would be susceptible to a accounting errors because it has no sufficient documents for tracking the cash.
- Due to lack of control, Petty Cash are always in a chance of misappropriating of the fund.
- The fund of petty cash may be used in unauthorized expenses.
How is petty cash book prepared?
To avoid a large number of small payments, a separate cash book is made which is maintained by a petty cashier, who is paid a small amount at the beginning of the period called impress amount. When petty cashier spend the money, he is reimbursed the same amount to make further small expenditure.
What is petty cash book short answer?
The petty cash book is a recordation of petty cash expenditures, sorted by date. In most cases, the petty cash book is an actual ledger book, rather than a computer record. This format is an excellent way to monitor the current amount of petty cash remaining on hand.
How do I start petty cash?
How do I set up a proper petty cash system?
- Step 1: Get a lockbox or cash register.
- Step 2: Choose a petty cash custodian.
- Step 3: Set an initial amount, a replenishment threshold, and a withdrawal limit.
- Step 4: Go to an ATM, or write a check to petty cash.
- Step 5: Create a petty cash log.
Why do you need a petty cash book?
The Cash book can be maintained properly as petty transactions are maintained separately. The Petty Cashier are paid as needed that helps to reduce the misappropriation of cash. The liability of the petty cashier is limited to imprest amount.
What are the advantages of petty cash system?
The advantages of Petty cash system enumerated are as follows: Fixed amount is paid to the petty cashier along with the imprest system. The Chief cashier is relieved from the cumbersome work of petty cash disbursement. The Cash book can be maintained properly as petty transactions are maintained separately.
What does petty cash book mean in imprest system?
In a imprest system, a cashier is provided a small amount to meet the petty expenses of a given period and is authorized to make such payments and to record them in a separate Cash Book. Petty Cash book system are also called as “Imprest System.” The person who is maintaining petty cash book is called as a “Petty Cashier.”
What happens when petty cashier spends more than Rs 480?
At the week end or earlier, the Petty Cashier spent Rs 480 and needs more cash. Therefore, Petty Cashier completes the records and hands over the petty cash book along with vouchers to Chief Cashier, who examines the entries.
