Petty Cash is a small amount of money which is made available with the accountant or the accounts department of a company for the day to day running of the business. Especially to manage daily cash requirements (daily wages, petrol expense, newspaper expenses, etc.).
This amount differs from company to company and that all depends on and varies from worth of the company, nature of business, etc.
The accounting principles say strictly to record even the single penny you incurred as an expense and a single penny you received on account of income. Also the expenses accrued or prepaid (payables) and receivable. This is just because accounting standards need figures to work on not assumptions.
Now when we talk of Petty Cash ( small amount of money from business), people might think the other way of not recording it as it may not make a difference between huge amounts. This is something totally wrong as a recording of petty cash is of the same importance and makes the life of an accountant easy to give a fair and true picture of the business.
Here is preview of this Petty Cash Report Template,
Maintenance of Petty Cash register helps the accountant / accounts department evaluate payments and receipts taking place on a daily basis and at the end of the month take its closure amount if any balances. Typically its a matter of accuracy in the accounting language.
Maintaining, recording and controlling a strict and stable procedure for petty cash funds register makes the business flow smoothly. This leads to fewer mistakes and less time is spent worrying about petty cash as every receipt and every payment is on record with source. Daily recording and monthly reporting of petty cash reduces the chances of fraud or mistakes.
This way/ process of accounting allows a company to make and track their small purchases or expenses.. Although, the payments are small, but it is very important to record your petty cash procedures with sources to acknowledge the concern people where all of the business’s funds are going and how can overcome the shortages if any..
Most highlighting is the barrier regarding the petty cash is that, the register needs to be up to date always without any point of delay which is usually not accepted by the company and this all falls on the shoulders of the custodian (accountant / accounts department). This is mainly because the inspector / controller at a determined audit session / period may ask you as a surprise activity to present him the ledgers and your periodical petty cash report/ register..
Since we have discussed earlier that the prime cause of maintaining a petty cash register is that the incomes and the expenses of the company are being registered at the time when actually the money transferred, Hence, the practice of keeping the records up to date makes the life of the person maintaining the register easy and hassle free.
Although, nowadays we find many companies rendering banks for their petty cash register maintenance for the cause of accuracy.
Here is download link for Petty Cash Report Template,