Types of Petty Cash Books, Format, How They Work, Pros and Cons



When someone is in charge of an organization's finances, they have to deal with hundreds of problems every day. One challenge you should never take lightly is keeping track of your small cash expenses and keeping a petty cash book.

You ask us why we spend so much time, energy, and effort on things that don't matter. Yes, petty cash is a very small part of business compared to other tasks and transactions. But keep in mind that in business, God is in the details.

What is a Petty cash book?
A petty cash book is usually a ledger book instead of a computer record because it is part of a company's manual system for keeping records. This is not the same as bookkeeping, which is the process of keeping track of your business's financial transactions in a way that makes sense.

Along with a regular cash book, most companies also keep a petty cash book to track small, daily expenses like food, gas, office supplies, electricity, postage, newspapers, travel, etc. A "petty cash cashier" is the person who keeps track of these transactions.
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How do you keep track of small amounts of cash?
Here are the three different ways that organizations keep track of their small amounts of cash. Here's what they are:

1. Open system/ordinary system
In this system, the small cashier is given a lump sum to cover costs. After spending the money, the cashier gives the accounts and receipts to the main cashier to make sure everything is right.

2. Set in stone
In the fixed petty cash system, the head cashier gives the petty cash cashier a set amount of money for a set amount of time. When the money is gone, the petty cash cashier will turn in the account and get more money for the next period.

3. Imprest system
The most common way to keep track of small amounts of cash is the imprest system. Under the imprest system, the cashier is told ahead of time how much money will be set aside for small expenses over a certain time period. After spending the imprest cash, the cashier will turn in a detailed account at the end of the period and get the advance for the next period. Also, the money he gets is known as "imprest cash."

What kinds of cash books are there?

1. Cash book with columns
In a columnar petty cash book, daily expenses are written down in different money columns. This little cash book has two sides: one for adding money and one for taking money out. In the details column, which is a single column, you list the details of cash income and cash outflow. In the other column, you can see the debit and credit dates. The money from the head cashier is also written in the debit money column. At the same time, there will be money columns for each expense on the credit side, which will be set up in order. Lastly, the total expense will be shown in the total money column on the credit side, which lists all expenses.

2. Analytical book on small money

The best way to keep track of payments made with small amounts of cash is with an analytical petty cash book. On the credit side, there is a separate column for each small expense. When a small expense is written in the column for total payments, the same amount is written in the column for the small expense.