1. 13-1 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson Chapter 13 – Petty Cash Learning Outcome The outcome for this chapter is to record and balance petty cash transactions using an imprest system.

2. 13-2 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson KEY TERMS Petty cash advance Petty cash fund Petty cash imprest system Petty cash vouchers Reimbursement cheque

3. 13-3 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson PETTY CASH ADVANCE ACCOUNT Petty cash advance is an asset and establishes the fund. Petty cash asset account does not change unless petty cash float is increased. Increase in petty cash float is recorded in Cash payments journal as: DR:Petty cash (asset) CR: Bank (cheque account)

4. 13-4 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson PETTY CASH ADVANCE ACCOUNT cont… Petty cash used for minor expenses: –taxi or train fares –tea, coffee, milk –postage stamps –small stationery items Petty cash expenditure is recorded on reimbursement of float in Cash payments journal as: DR:Various expense a/cs CR: Bank (cheque account)

5. 13-5 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson PETTY CASH FLOWCHART Petty cash advance established Payment Petty cash imprest Petty cash book Cash payments journal  reimbursement Ledger accounts for posting of expenses Voucher Payment

6. 13-6 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson PETTY CASH VOUCHERS Used to record amounts reimbursed or used from petty cash float Receipts and details of purchase attached to petty cash voucher. No. 45 Petty Cash Voucher Date: ……………………………………… 6 June Paid to: …………………………………. C Chung For:………………………………………… Travel Account: ………………………………. Taxi fares Amount:………………………… $23.00 (incl. GST) Received: C Chung Authorised by: T. Tully

7. 13-7 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson GST AND PETTY CASH GST included in most petty cash transactions Petty cash expenditure recorded on reimbursement of float in Cash payments journal as: DR:Various expense a/cs GST input tax credits CR: Bank (cheque account)

8. 13-8 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson INTERNAL CONTROL AND SECURITY Internal checks and reconciliation completed by independent officer (only if advance is large) Reimbursements authorised by petty cash officer Refunds of payments in advance banked and recorded in Cash receipts journal

9. 13-9 Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Introductory Accounting 2r, by David Willis By Kaye Watson SUMMARY Petty cash is used for minor expenses. Petty cash imprest system maintains control over these cash payments. A petty cash book and vouchers are used to record small payments. GST is recorded on reimbursement.