1. 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.

2. 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

3. 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

4. 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

5. 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.

6. 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

7. 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

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

9. 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

10. 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 .