Who Is Responsible For Petty Cash?

Who handles petty cash?

The most common accountancy approach used to manage petty cash is the ‘imprest’ system.

This involves an employee being given the role of ‘custodian’ and made responsible for managing the petty cash.

The cash is usually kept in a money box within the office..

What is petty cash used for?

Petty cash or the petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check. There might be a petty cash drawer or box in each department for larger corporations.

Is petty cash an expense?

Petty cash is a current asset and should be listed as a debit on the company balance sheet. … When petty cash is used for business expenses, the appropriate expense account — such as office supplies or employee reimbursement — should be expensed.

How much petty cash is allowed?

That depends on how many small expenses you make and how often you make them, but most businesses seem fine carrying between $100 and $200 in petty cash. Use your judgement, and put less into the petty cash fund than you think you need—you can always increase the amount later.

Is petty cash included in bank reconciliation?

The petty cash reconciliation process starts by counting up the amount of cash on hand at the end of the financial period and using this as the ending balance for the petty cash account. Next, receipts are reviewed and verified as appropriate and complete.

How do you handle petty cash?

Tip #1: Keep a Record in Place There are two ways of recording petty cash transactions, either offline or online. The best way to maintain the account is by designating one person to manage the amount and documentation. Regular and detailed monitoring of transactions can keep a check on the reasonable use of funds.

Is petty cash debit or credit?

The Petty Cash System The initial petty cash journal entry is a debit to the petty cash account and a credit to the cash account. The petty cash custodian then disburses petty cash from the fund in exchange for receipts related to whatever the expenditure may be.

Is petty cash an asset?

Yes, petty cash is a current asset. A current asset is any asset that will provide an economic benefit within one year. Petty cash refers to spending cash that a company has readily available.

How do you liquidate petty cash?

Petty cash procedureComplete reconciliation form. Complete a petty cash reconciliation form, in which the petty cash custodian lists the remaining cash on hand, vouchers issued, and any overage or underage. … Obtain cash. … Add cash to petty cash fund. … Record vouchers in general ledger.

What is petty cash policy?

Petty Cash is usually the mechanism of last resort to access cash for payments, when other disbursement methods are impractical or cannot be used. Petty cash funds must not to be used as an operating fund, i.e., to pay invoices for goods or services, to pay salaries or wages, or to make advances or loans.