What Is Petty Cash? Definition and Guide 2023

More than 4,200 companies of all sizes, across all industries, trust BlackLine to help them modernize their financial close, accounts receivable, and intercompany accounting processes. To check the balance in a petty cash account, highlight the account on the Petty Cash screen and select the Balance button. All these details are usually completed through a petty cash voucher/worksheet.

This company-wide effort crosses multiple functional areas and is reinforced by critical project management and a strong technology infrastructure. Retailers are recalibrating their strategies and investing in innovative business models to drive transformation quickly, profitably, and at scale. Save time, reduce risk, and create capacity to support your organization’s strategic objectives. To sustain timely performance of daily activities, banking and financial services organizations are turning to modern accounting and finance practices.

What Is an Example of Petty Cash?

Your company will also want to have a set of policies in place to establish how the https://www.bookstime.com/articles/what-is-petty-cash funds are spent and administered. These policies will identify the sort of transactions that qualify as petty cash expenses, and it will establish guidelines for how these business expenses are to be documented. The petty cash is controlled through the use of a petty cash voucher for each payment made.

Some businesses put $50 into their petty cash fund while others put $250—the amount of your fund depends on your business needs. Establishing a dollar amount to meets your business’s petty cash needs is essential. Make sure your employees understand what the petty cash fund can or can’t be used for by creating a petty cash policy. For example, for Jane to get reimbursed for the donuts she purchased for the meeting, she needs to provide a receipt. The receipt will be used later as back up for recording the petty cash transaction as an expense in your general ledger.

The Petty Cash Fund

Using a petty cash log or petty cash slips will help capture these expenses so they can be used to offset income for business tax purposes. Employees take money from the petty cash account, recording each transaction with date, amount, vendor (who was paid), and business purpose. The petty cashier is always assumed to hold cash equal to the imprest account in the form of actual cash or paid-up PCVs.

Select the down arrow to choose the transaction code for this petty cash transaction. The transaction codes set up for cash payment transactions are listed on the LOV if the Paid option button was selected. The transaction codes set up for cash receipts are listed on the LOV if the Received option button was selected.