1. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.1 Chapter 18 The analytical petty cash book and the imprest system

2. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.2 Learning objectives After you have studied this chapter, you should be able to:  Explain why many organisations use a petty cash book  Make entries in a petty cash book  Transfer the appropriate amounts from the petty cash book to the ledgers at the end of each period

3. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.3 Learning objectives (Continued)  Explain and operate the imprest system for petty cash  Explain why some organisations use a bank cash book  Make entries in a bank cash book

4. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.4 The petty cash book  Every business has a number of transactions of very small value that would clutter the cash book.  By recording these transactions in the petty cash book, it frees the cash book for important transactions.  Using a petty cash system allows a junior member of staff to have some responsibility.

5. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.5 The petty cash system  When petty cash is being claimed, the claimant will have to fill in a voucher, detailing what the expenditure was for.  A bill for the expenditure should be attached to the voucher.  The claimant should sign the voucher to certify that their expenses had been received from the petty cashier.

6. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.6 The imprest system  A petty cash book run under the imprest system allows enough cash to meet petty cash expenditure for a particular period.  At the end of the period, the cashier determines the amount spent.  In exchange for the vouchers, the cashier tops the petty cashier’s float up to the original level.

7. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.7 An example of the imprest system

8. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.8 An analytical petty cash book

9. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.9 The postings from the petty cash book

10. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.10 Bank cash book  Nowadays, many businesses have only a small number of sales that are paid for with cash and credit cards, cheques, and direct transfers are used.  In this case, a business may choose to run a petty cash book and a bank cash book, meaning that all cash payments are entered into the petty cash book and the bank cash book contains the bank and discount columns only.  A bank cash book has an extra column to detail what has been banked.

11. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.11 Bank cash book (Continued)

12. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.12 Learning outcomes You should have now learnt: 1. That the petty cash book saves (a) the cash book and (b) the ledger accounts from containing a lot of trivial detail 2. That the use of the petty cash book enables the cashier or a senior member of staff to delegate this type of work to a more junior member of staff 3. That the cashier should periodically check the work performed by the petty cashier

13. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.13 Learning outcomes (Continued) 4. That all payments made by the petty cashier should have petty cash vouchers as evidence of proof of expense 5. How to enter petty cash transactions into the petty cash book 6. How to transfer the totals for each expense recorded in the petty cash book to the appropriate ledger accounts

14. Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1, 12 th Edition, © Pearson Education Limited 2012 Slide 18.14 Learning outcomes (Continued) 7. How to operate a float system for petty cash 8. The difference between a cash book and a bank cash book 9. Why some organisations use a bank cash book instead of a cash book