Question -
Answer -
Recording of repetitive expenses in cash book will burden the cashier. Hence, a separate book is created where petty expenses are recorded. Examples of such type of expenses are: Stationery, Refreshment, Postage, and Conveyance. Petty cash book is maintained by Petty cashier.
Preparation is mostly done by Imprest System as it is more convenient. In this system, petty cashier is given a pre-defined sum of the money for a period. At the end of the period, the amount spent by him is reimbursed by cashier so that the cashier has the same amount again at the start of the period.
The Performa of Petty Cash Book is given below.
| Petty Cash Book |
| Dr. | Cr. |
| Amount Received | Date | Particulars | Voucher No. | Amount Paid ₹ | Analysis of Payments |
| Postage | Stationery | Conveyance | Telephone and Telegram | Miscellaneous | Remarks |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Advantages of Petty Cash Book:
1. Division of labour: By delegating the work to a petty cashier the cashier is able to look into other aspects of a firm.
2. Avoid bulky cash books: Recording repetitive transactions in a cash book makes it bulky, petty cash makes it easy and avoids making cash book bulky.
3. Less error prone: Head cashier will be making periodic audits on the petty cash book, so it will be error free.
4. Ease of posting: Only the petty expenses are recorded periodically which makes posting easier.