Keep track of petty cash

08 Sep Keep track of petty cash

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Money may be disbursed from a petty cash account only if the disbursement would be allowable were the expenditure being made from the corresponding fund itself and not a petty cash account. A state agency may establish a petty cash account only in accordance with law and the rules established by the Comptroller’s office. To continue the analogy, let us assume that you are a parent and your child wants a piece of candy from a candy dispenser in the store. It would take way too much time and may not even remedy the problem because the what is petty cash candy machine does not accept checks. In your personal life, there are times that you will make large purchases, and other times that you will make smaller ones. You can think of a business Cash account the way that you would think of your savings account, and the Petty Cash account as a few bills and change that you keep in your pocket for immediate purchases. The custodian is responsible for completing a Petty Cash Receipt for every transaction and ensuring the receipt is signed by the recipient of the petty cash disbursement.

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Cash is hard to secure and impossible to track; it’s very easy for bills to disappear without a trace—even if you’ve established a careful system of receipts or vouchers. The reconciliation process ensures that the fund’s remaining balance equals the difference between the original balance minus charges detailed on receipts and invoices. If the remaining balance is less than what it should be, there is a shortage. If the remaining balance is more than what it should be, there is an overage. Although there can be minor variances, when unbalanced, the source of the discrepancy should be identified and corrected.

• Once the cash has been released to the petty cash fund, you will want to secure it, most likely in a lock box, safe, or a locked drawer or file cabinet.
• For example, for Jane to get reimbursed for the donuts she purchased for the meeting, she needs to provide a receipt.
• Petty cash is an integral part of the accounting function in most organizations and is well taken care of by an appointed custodian.
• The use of petty cash is only appropriate for small, erratic expenses that pop up unexpectedly.

Petty cash accounts are usually used to record paid-outs that cannot be charged to a guest and for which a folio is not required. For example, petty cash might be used when a cashier must pay for a delivery or for flowers or newspapers. The cashier must maintain a record of paid-outs and turn them in at the end of the shift, since petty cash transactions affect the cash balance in the cashier’s cash drawer. After the owner or bookkeeper records all expenses in the books, cash must be taken from the checking account to replenish the petty cash box. Record the transfer of cash by debiting Petty Cash and crediting Checking Account.

Petty Cash

Read on to learn about establishing a petty cash fund, handling petty cash accounting, reconciling your petty cash account, and claiming a tax deduction. Designate a petty cash fund custodian.Prior to requesting a petty cash account, the unit should identify an individual who will be fiscally responsible for the custody and maintenance of the petty cash. Make sure everyone with access to petty cash funds knows what they’re for, and provide some examples of typical petty cash expenses to make sure there’s no confusion.

Accrual accounting is where a business records revenue or expenses when a transaction occurs using the double-entry accounting method. The Internal Revenue Service recommends filing out petty cash slips and attaching them to receipts to record and document petty cash expenses. The custodial duties generally include enforcing petty cash rules and regulations, requesting replenishments, and dispensing funds. Complete a check request or petty cash voucher slip and attach all receipts. Failure to follow these policies may result in the loss of your department petty cash account. Any theft of a department petty cash account must be reported immediately to Public Safety and the University Office of Internal Auditor.