A petty cash book is a place where you record all the expenses for small purchases, such as postage stamps and office supplies. You can also use it to record any money you spend on small items that are not part of your regular budget. The petty cash book helps you avoid running out of money while you’re on the road or travelling. The expenditures in the petty cash book are sorted by dates. It is typically recorded in a physical ledger book instead of digital records.
Over the years more and more companies are using company credit cards for petty expenses because of the ease of recording credit card expenses which you can directly get from the statement. This has led to a decline in the use of cash for petty expenses.
Different varieties of petty cash book
- Columnar Petty Cash Book.
The columnar petty cash book is a simple, easy-to-use and maintained the type of petty cash book used in many businesses. It is designed to be used by one person, who will enter all transactions into the book as they occur and make sufficient entries to balance the accounts on a daily basis. It is also possible to make purchases off this account (for example, if you need a cup of coffee). While it is simple, quick and easy to use, it does have its limitations such as its flexibility in terms of what can be purchased using this account and its ease of maintenance
- Imprest Petty Cash Book
An imprest petty cash book is very similar to a columnar book except that instead of writing down every single expense in detail, it only records those expenses that your supervisor or manager has approved. This means that every time you receive an advance payment (such as a salary), there will be no record of it being paid out into your petty cash account until your manager approves it.
Advantages of petty cash book
Petty cash is the easiest way to keep track of money that is used for short-term expenses. It’s also a good way to keep track of receipts for tax purposes or while tracking discrepancies in direct expenses or indirect expenses, or even just for keeping your expenses in check.
Here are some reasons why you should use a petty cash book:
- It’s quick and easy to use. Petty cash books are designed to be used by anyone that needs to record transactions quickly and easily. In fact, many people carry them around with them at all times so they can jot down purchases as they go.
- It’s simple and efficient. Petty cash books are designed for people who don’t have time or money on their side, but still want to stay organized and keep track of where their money is going. They don’t require any expensive software or programs, and they’re straightforwardto use — even if you’re not an accounting expert!
- They help you save money. Petty cash books help you keep track of every dollar spent on anything related to your business. This includes any expense that isn’t directly related to running your business (like going out with friends or buying lottery tickets).