THE ANALYTICAL PETTY

CASH BOOK AND THE

IMPREST SYSTEM
 Not important
Small

PETTY CASH
A book of original entry, where small, usually insignificant
amounts of money are recorded. Such as travel expenses for
employees, postage expenses etc. The Source document used is
the petty cash voucher

We now know 6 books of original entry:

1.Cash book
2.Sales day book
3.Purchase day book
4.Returns inwards
5.Returns outwards
6.Petty Cash
 WHY DO WE USE A PETTY
CASH BOOK?
If all small cash payments were entered in to
the cash book, then there would be too many
insignificant entries, for example if the
company paid for traveling expenses for each
employee, then over the year there would be
approximately 250 entries per employee.
However if the petty cash book is used, we
would put one entry per month, reducing the
entries from 250 to 12 per year.
THE IMPREST SYSTEM
The petty cash book is the book of prime entry which
keeps a cumulative record of the small amounts of cash
received into and paid out of the business (cash float).
The amount held in cash day one will be the float. At
any one time the amount of receipts and cash remaining
should total to the original float.
The float will be topped up from time to time and the
amount it will be topped up by will equal the amount of
receipts in the petty cash box. This system is called the
imprest system.
 THE IMPREST SYSTEM
For example, the petty cashier will keep £150 in her draw.
1.The employee will complete a petty cash form and give it to the petty cashier with any receipts
as proof.
2.The petty cashier will reimburse the employee
3.The cashier will make sure the petty cashier has £150, and will ‘top-up’ usually monthly.

employee Petty
Cashier Accountant
 STEPS TO WRITE UP A PETTY
CASH BOOK
❑Enter the date
❑Enter the details of the cash receipts and payments
❑Enter the total amount of the expenditure in the total
columns and in the respective expenditure column
❑Balance off the cash book:
▪Add up each of the expense columns
▪Add up the total column
▪Enter the amount that is needed to restore the float as
balance c/d in the total column
▪The sum of the total column is then double line
▪Enter the balance b/d
SAMPLE PETTY CASH BOOK
TEXTBOOK ACTIVITIES

19.1, 19.2 & 19.3x PAGE 197-8 in the

Textbook