A petty cash fund is cash in a secure lock box, which is used for small purchases and maintained by a petty cash custodian 2 journal entries and procedures for petty cash let's look at the journal entries and documentation used in working with a petty cash fund, and then we will review a detailed example.
A petty cash reconciliation is a formal review of petty cash records the intent of this activity is to see if there have been any undocumented disbursements such disbursements are a common problem in petty cash, where there is a high risk of fraud. Petty cash reconciliation is the process of verifying transaction involving petty cash funds its purpose is to ensure that funds are being used appropriately it is an important internal control for fraud prevention. The goal of this document is to provide the governance framework for a standard and consistent process for establishing, maintaining, and closing petty cash, change fund, or subject participation accounts across petty cash – a petty cash fund is cash loaned for the purpose of making small purchases where it is not establishing petty.
Petty cash policies and procedures are an important part of small business management facts petty cash is a small amount of money set aside for miscellaneous expenditures. Although a petty cash fund shouldn’t replace your full-scale vendor payment process, it’s an alternative payment method that’s easy to set up and use reasons to use petty cash fund a petty cash fund is created for convenience. Petty cash policies and procedures help business owners limit the amount of time they spend on their accounts payable process accounts payable is responsible for writing checks and paying the company’s bills.
Here is a video of the petty cash process and then we will review the steps in detail usually one individual, called the petty cash custodian or cashier, is responsible for the control of the petty cash fund and documenting the disbursements made from the fund by assigning the responsibility for the fund to one individual, the company has.
Petty cash is a small amount of money, but it adds up quickly as it’s replenished to track the cash, create a petty cash account in the asset section of your chart of accounts when you’re ready to replenish the fund, record the expenses in your accounting software based on the petty cash expense log. How to account for petty cash two parts: establishing the petty cash system managing the petty cash expenditures community q&a every business makes small purchases each day for items such as office supplies, stamps, shipping charges, and other miscellaneous items.
Petty cash procedure guide updated april 2016 page 2 of 3 4 safeguard the cash a keep petty cash funds in a secure area such as a locked drawer or small safe b petty cash funds should not be comingled with other funds c. Reimbursements from the petty cash must be properly authorized and properly documented 1 a petty cash voucher should be used for each disbursement 2 the voucher should be signed by the requestor and approved by the fund director 3 the voucher should show the nature of the expenditure 4.
When cash is added to a petty cash fund, the basic concept is to replace the amount of any cash that had previously been disbursed from the fund this involves summarizing all disbursements made and issuing cash back to the fund for that amount. Fund petty cash when cash is added to a petty cash fund , the basic concept is to replace the amount of any cash that had previously been disbursed from the fund this involves summarizing all disbursements made and issuing cash back to the fund for that amount.