1. The Petty Cash Book

2. Aims of the Session
The petty cash book
Controls on petty cash

3. Petty Cash Book Used for low value purchased such as: Stationery
Small office supplies
Casual wages
Window cleaning
Travel expenses
Postages
Usually has a maximum value, for example £25 for an item.

4. The Petty Cash Book The Petty Cashier receives a float.
Is responsible for the security of it.
Makes payments against vouchers.
Records and analyses the vouchers in the Petty Cash Book.
Balances the cash regularly.
Tops it up when required.
Passes the completed book to the bookkeeper for entry into the ledgers.

5. The Imprest System
The petty cashier starts the period with a set amount of money.
As payments are made the level reduces.
At the end of the period the money is topped up.
Start the week with imprest amount
£100.00
Total of petty cash payments during the week
£80.00
Cash held at the end of the week
£20.00
Amount drawn from bank to restore the imprest amount
Cash at the start of the next week

6. Petty Cash Vouchers Contain: Date, details, amount of expenditure.
Signature of person making the claim.
Signature of person authorising the payment.
A serial number.
Have supporting documentation.
Petty Cash Voucher Number 47
Date
Description
Amount
Photocopier paper
VAT at 20%
Total 3 20 64 84
Signed: Mrs Tiddlywinks
Authorised: Ms Puddleduck

7. Layout of the Petty Cash Book
Date
Details
Amount
Postages
Stationery
Travel
Ledger
Money In
Money Out

8. Murdstones Tutor led exercise
The week begins with a petty cash float of £100.
9 Apr the cashier reclaims £52, this is the difference between what has been spent £62, what has come in £10 and tops the petty cash back up to £100.
Receipts and payments are totalled to £162.
The balance brought down will be £100.

9. Transfer the Analysis Columns
The totals are then transferred to the general accounts.
The petty cash book can be part of the double entry system or go through a control account.
Part of the double entry system straight transfer of information.
Not part of the double entry system goes through the petty cash control account.

10. Restoring the Cash Float
The petty cash book would be reimbursed, depending on the business’ procedures.
The double entry is:
Credit: Cash book/Bank (reducing an asset)
Debit: Petty cash (increasing an asset)
The reimbursement is what has been spent, to top up the petty cash to required amount.
Cash Requisition Voucher Number 007
Date: 09 Apr X5
Details
Petty cash reimbursement
Total 52 00
Signed: Mrs Goldfinger
Authorised: Mr J Bond

11. Checking the Cash The petty cash needs to be regularly checked.
At any one time the imprest amount minus the value of the vouchers should equal the cash in hand.
A company has an imprest amount of £100, which is restored at the beginning of the month. The following payments were made in April:
6 Apr
Stationery
£12.50
10 Apr
Taxi fare
£10.00
14 Apr
Postage stamps
£4.55
20 Apr
Window cleaning
£12.00
25 Apr
Donation to charity

12. Checking the Petty Cash
6 Apr
Stationery
£12.50
10 Apr
Taxi fare
£10.00
14 Apr
Postage stamps
£4.55
20 Apr
Window cleaning
£12.00
25 Apr
Donation to charity
On 30 Apr the petty cash comprised of:
1 x £10 note, 7 x £5 notes, 5 x £1 coins, 1 x 50p coin, 1 x 20p coin,
1 x 10p coin, 2 x 5p coins, 1 x 2p coin, 3 x 1p coins.
Total payments were £49.05.
The remaining cash should be £100 – = £50.95

13. Checking the Petty Cash
Number Held
Value
£10 1
£10.00 £5 7
£35.00 £1 5
£5.00
50p
£0.50
20p
£0.20
10p
£0.10 5p 2 2p
£0.02 1p 3
£0.03
TOTALS
£50.95
On 30 Apr the petty cash comprised of:
1 x £10 note, 7 x £5 notes, 5 x £1 coins, 1 x 50p coin, 1 x 20p coin,
1 x 10p coin, 2 x 5p coins, 1 x 2p coin, 3 x 1p coins.
Total payments were £49.05.
The remaining cash should be £100 – = £50.95

14. Petty Cash Control Hand over – take overs Consistency
Security of cash and vouchers
Correct payments
Accuracy when writing up the petty cash book
Surprise checks need to be carried out by management
Segregation of duties between Petty Cash Cashier and bookkeeper.
Petty cash should always balance.
Petty cash should be frequently checked by account supervisor.
Discrepancies need to be dealt with promptly.
HOTO – balances need to be reconciled, any discrepancies should be reported to management
Same amount of money every month/week
Needs to be kept in a locked cash box and control kept of the keys, might want to keep it in a locked draw too. Vouchers need to be kept for at least 6 years in a secure place to avoid fraud/tampering with
Check for: person receiving has signed voucher; voucher is signed by authorising person; supporting evidence is attached; amount is within petty cash limits.
Must be accurate when being written up
Why? To ensure that nothing untoward is going on.
Payments and receipts and cash should add up to balance.
Discrepancies may include: petty cash claims not authorised; insufficient supporting evidence; amounts exceeding the petty cash limit; supporting paperwork and voucher differ; difference between totals of expenses columns and totals of the petty cash columns; difference between petty cash box and balance in book.
What to do? If you can’t resolve it yourself (simple maths mistakes, missed a voucher) refer to supervisor

15. Recap
The cash book is a book of prime entry and part of the double entry system.
Records cash and bank payments/receipts.
The analysed cash book shows more detail.
Petty cash book for small payments.
Uses the imprest system.

16. Questions?

17. Look Forward To:
Trial balances
Capital versus revenue expenditure