Petty Cash System- what is it? Petty cash means ‘small’ cash Is used to make low value purchases Reimburse employees expense costs relating to the business Examples – coffee, Postage charges Payment for window cleaner Taxi, bus & train fares Petty cash reimbursements may have a set monetary limit, anything above the limit is paid by cheque or an automated method.

Reasons for a Petty Cash System Most businesses work from their bank account making payments and receiving monies by cheque or automated methods. The cost of generating the volume of cheques to reimburse the small monetary values becomes costly A lack of physical cash coming into the business to allow cash purchases To create a specific system where cash is held specially for the reimbursement of small transactions

Petty cash system One person is usually given the responsibility of the petty cash system. They are known as the petty cashier. Their role is to request monies for the petty cash system. Record the cash vouchers to a petty cash book Pay the money to the employee This responsibility is usually given to a junior staff member

Process for petty cash purchases Staff member goes to purchase stamps for the business Stamps & receipt given as staff member hands over payment Staff member write up petty cash voucher, claiming the monies required, attaching the receipt Hands voucher to petty cashier Petty cashier checks voucher & receipt for accuracy

PCP - Continuation Cashier takes money from the cash box Gives monies to the staff member to reimburse them the costs Petty cashier writes up the petty cash book showing the money spent and the breakdown of costs.

Imprest System for Petty Cash Principle of the Imprest system is to set up a specific sum of cash for the petty cash system in the cash box Vouchers are paid out from the cash box for the timescale required. – week, month At the end of the timescale the petty cashier requests the money to bring the cash box back to the specified sum of cash Therefore: CASH plus VOUCHERS must equal the IMPREST VALUE

Petty cash Voucher Petty cash voucher is the document used to record small expense purchases It should be prepared by the employee requesting payment or the petty cashier Must include details of the expense Breakdown of the expense values Till receipt relating to the expense Signed by the employee Authorised & signed by a higher rank staff member – supervisor/ manager PETTY CASH VOUCHER DATE: 15 May 20XX NUMBER: 377 DETAILS £ 40x 1st class stamps 17.20 Paper – 4 reams 23.60 Net 40.80 VAT 4.72 Total 45.52 Claimed by: AA Tech Authorised by: S Sweet

Payments & analytical columns Petty Cash Book Debit side Receipts Credit side Payments & analytical columns Date Details £ Voucher no VAT Travel Post Station-ery Refreshments

Petty Cash Book The petty cash book can be a book of prime entry for petty cash entries and as the general ledger. Therefore making it part of the double entry system The debit side – records all receipts (monies) going into the cash box The credit side – broken up as 2 parts Records the total value of payments from the cash box The breakdown of the payments what it’s for

Process of the Petty Cash Book (PCB) Enter the vouchers and receipts to the relevant side of the PCB Once all vouchers have been recorded to the PCB Total the payment columns including the analysis columns Cross cast the analytical columns to ensure the total is correct Balance the PCB showing the monies left in the cash box Reconcile the cash box against the PCB by counting the physical cash Restore the imprest value requesting monies from the bank showing the breakdown of notes & coinage required .