Cash Book & Petty Cash Book

Cash Book

• The Cash Book is used to record the money side of book keeping transactions as part of double entry.
  
• The cash book may combine the roles of the book of prime entry and double-entry book-keeping

The Cash Book record:

• Cash Transaction
  -all receipts in Cash
  -most payments for cash except for low- value expense payments ( which are paid through petty cash book)
  
• Bank Transactions
  -all receipts by cheque ( or payments of cash in to bank)
  -all payments by cheque ( or withdrawal of cash from bank)
  
• Receipts from cash sales, credit customers (Receivables/Debtor), loans, VAT repayments, capital for owners etc.
  
• Payments for cash purchases, expenses, loan repayments, VAT payments, payments to creditors (Payables), etc.

Role of the Cashier:

• records receipts and payments by a cheque and a cash
  
• makes cash payments, and prepares cheques for signature by those authorised to sign
  
• pays cash and cheques received into the bank
  
• has control over the firm’s cash, either in a cash till or cash box.
  
• Issues cash to the petty cashier who operates the firm’s petty cash book

CASH BOOK – BASIC RULES

• NOTE: The DEBIT side of the cash book is used for RECEIPTS, with one column for cash and one for bank receipts.
  
• The CREDIT side of the cash book is used for PAYMENTS with money column for cash payments and one for bank (Cheque) payments.

TRANSFER TO SALES LEDGER

Names (Accounts) of customers only E.g. Peter Ltd BRT Contractors

TRANSFER TO PURCHASE LEDGER

Names (Accounts) of Suppliers only E.g. Mary Ltd Nania Contractors

TRANSFER TO GENERAL LEDGER

Anything other than names of customers and Suppliers E.g. VAT (VAT on Sales / VAT on purchases) / Sales Ledger Control Accounts / Purchases Ledger Control Accounts / Wages / Rent / Office Expenses / Discount Allowed / Discount Received

PETTY CASH BOOK

• A cash book used for making (petty) payments, details of which are entered from the PETTY CASH VOUCHERS supported if possible by a receipt.
  
• An amount of cash is handed by the main cashier to a member of staff, the petty cashier, who will be responsible for security of the money and will make payments as appropriate against authorised petty cash vouchers.

The Petty cash procedure:

In order to operate the petty cash system, the petty cashier needs the following:

• A petty cash book to record transactions
  
• A lockable cash box in which to keep the money
  
• A stock of blank petty cash vouchers for claims on petty cash to be made.
  
• A lockable drawer in which to keep these items.

PCB Payment Examples…

• Stationery items
  
• Small items of office supplies
  
• Window cleaning
  
• Postages
  
• Meals and drinks (incurred on behalf of the business)
  
• Bus, rail and taxi fares (incurred on behalf of the business)
  
• Donations

IMPREST SYSTEM:

• A system used for controlling expenditure of small cash items which are recorded in the petty cash book.
  
• A cash ‘FLOAT’ of a fixed amount is provided initially to the person responsible for operating the petty cash system.
  
• Any cash paid out during a particular period, i.e. a week, is reimbursed to the petty cashier so restoring the ‘float’ to its original sum.