You can find the questionsanswerssolutions for the chapter 4 of cbse class 11 accountancy in this page. When petty cash is easy to get to employees, it is a suitable way to pay for little purchases. Petty cash book explanation, format, example, ordinary and. During an accounting period petty cash is used to pay cash expenses which are supported by petty cash vouchers. In module 12, which covered the bank cash book, the advantages of paying all cash and cheques into the. Here the petty cashier is given a lump sum amount of money at the beginning of the accounting period.
The advantages of analytical petty cash book are given below. Mar 17, 2018 it is also called as analytical petty cash book, as it analysis the payments under different heads separately. In fact, it is an extension of the simple petty cash book. The system is very useful specially if an analytical petty cash book is used. Any cash, which the petty cashier receives, will be recorded on the debit side left cash column of the book and any cash which he pays out will be recorded on the credit side right cash column of the boo k. The petty cashier makes the small payments and records them in the petty cash book.
The most common imprest system is the petty cash system. Required c i state the amount of cash there should have been in the petty cash box. The analytical petty cash book and the imprest system ppt video. The daily transactions that use the petty cash are entered into this system which ensures that there is. Imprest system petty cash book is quite helpful when the firm uses analytical. The importance of petty cash book imprest system is that it helps in basic bookkeeping. These small cash payments are recorded in a separate book, known as a petty cash book.
The simple petty cash book has only two amount columns. The analytical cash book is a book kept by a petty cashier. The petty cash book is ruled in the form of the single column cash book with an amount column and addition oat columns for the more usual classes of expenditure. Under this imprest system of petty cash book, the head cashier provides a fixed amount of money to the.
Each payment is recorded on it twice, one on total amount column and next on individual expense column. Simply can say pocket money for offices minor expenses. Like columnar petty cash book, it also contains many money columns in the credit side and one money column in the debit side and a particular column and a date column are also similar to that of the columnar or analytical petty cash book. A book of original entry, where small, usually insignificant amounts. Ppt the analytical petty cash book and the imprest system. At the end of the period the petty cashier balances his book. How the imprest system of petty cash book works your.
This is recorded as a separate account in the companys. Such as travel expenses for employees, postage expenses hospitality. Let us learn about the petty cash book and the various systems of maintaining the said account. Petty cash book is the book which is used for the purpose of recording expenses involving small amounts.
Totals are carried forward from page to page until the end of the periods. Ts grewal accountancy class 11 solutions chapter 7 special purpose books i cash book are part of ts grewal accountancy class 11 solutions. Under imprest system, a fixed amount of money known as float is given to the petty cashier to meet petty expenditures for an agreed period which usually consists of a week or month. While recording the transactions in petty cash book if all the expenses are analyzed and entries are recorded in cash book on the basis of this analysis such petty cash book is called analytical petty cash book. Petty cash book is maintained to record small expenses such as postage, stationery, telegram. Before the rise in the use of credit cards and charge cards, nearly all companies used petty cash accounts to allow employees responsible for purchasing small supplies to do so with minimal hassle. Now lets learn to actually establish a good system where you will be able to use your log book. Advantages and disadvantages of analytical petty cash book. Under this system an estimate is made of the amount required for small payments for a certain period, say, a week or a month and this amount is paid to the petty cashier in advance. Imprest system under this system management estimates the expenditure roughly for a period of week or month. It relieves the cash book and the chief cashier of the burden of recording tiny and frequent payments. Petty cash book is a ledger book, which is used to record petty cash. First, management has to estimate how many small purchases it will make and much money it will need for these purchases. The receipt column is used to record the opening balance and the amount received from the head cashier.
At the end of the period a petty cash reconciliation is carried out. This period could be a week, a month or even sometimes a day. Petty cash book explanation, format, example, ordinary. Understand how the imprest system works in the petty cash book. How to prepare petty cash bookpetty cash book in hindi with. Imprest system of petty cash is a system where the petty cashier is given a lump sum in cash often called a float keeping in view the possible needs of the business to meet its petty expenses for a stated period, e. Whether you decide to make a petty cash form or an actual book, the steps would be the same and the outcome would result in how well you manage the whole system. The imprest system is designed to provide a rudimentary manual method for tracking petty cash balances and how cash is being used. In such a cash book there are pre existing columns for the usual expenses that recur quite frequently for an. Lecture 5 the analytical petty cash book and the imprest system every business has a number of transactions of very small value which, were they all recorded in the cash book, would only serve to make it more difficult to identify the important transactions that businesses need to keep a close eye upon.
Ts grewal accountancy class 11 solutions chapter 7 special. The analytical petty cash book and the imprest system. How the imprest system of petty cash book works your business. What is imprest system in maintain petty cash book. Petty cash book format example definition explanation. It is also called as analytical petty cash book, as it analysis the payments under different heads separately. In such a cash book there are preexisting columns for the usual expenses that recur quite frequently for an organization. Nov 04, 2015 ordinary system imprest system in this system petty cashier is given appropriate amount of cash after spending the whole of that amount the submits the account to the head cashier this is the system of paying advance in the beginning and reimbursing the amount system of petty cash book 7. The analytical petty cash book and the imprest system springerlink. Ordinary system imprest system in this system petty cashier is given appropriate amount of cash after spending the whole of that amount the submits the account to the head cashier this is the system of paying advance in the beginning and reimbursing the amount system of petty cash book 7.
Since the petty cash book analysis, the expenses into a number of heads of expenses, the name given to it is analytical petty cash book. While recording the transactions in petty cash book if all the expenses are analyzed and entries are recorded in cash book on the basis of this analysis such petty cash book is called analytical petty. Nov 27, 2019 the imprest petty cash system is a method of accounting for petty cash expenses. Petty cash book 2019, imprest system of petty cash. At the end of agreed period, the petty cashier submits the details of all expenditures incurred by him to the chief cashier.
Many expenses of small nature are recorded in petty cash book. Petty cash book template excel software accountant. Mar 25, 2018 under this system, the total petty expenses for a particular period are estimated and that amount is advanced by the head cashier to the petty cashier. The difference between the total of the debit items and that of the total column on the credit represents the balance of the petty cash in hand. Petty cash is the small cash reserves that businesses keep on the. Recording of transactions ii petty cash book solutions this page contains the cbse accountancy class 11 chapter recording of transactions ii notes. The more scientific method of maintaining petty cash so for introduced into practice is the imprest system. Such a system is known as the imprest system of pettycash.
The imprest system is a form of financial accounting system. Definition of an imprest system of petty cash an imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. A petty cash book can either be a simple petty cash book or an analytical petty cash book. Sep 26, 2019 it is the most scientific method to maintain petty cash. Sri r maintains a columnar petty cash book on the imprest system. It is a system of petty cash book where a person is given a fixed amount in the beginning of the period, the petty cashier submits the account of. Petty cash book is a kind of cash book which records large number of small payments such as conveyance, cartage, postage, telegrams and other expenses under the imprest system. Record the following transactions in an analytical petty cash book for. The book has one column to record receipt of cash which is only from the main cashier and other columns to record payments of various types. Under this system, the total petty expenses for a particular period are estimated and that amount is advanced by the head cashier to the petty cashier. Imprest system petty cash book archives tutorstips. In a business operating this type of cash book, small cash payments are usually made out of petty cash.
Petty cash book 2019, imprest system of petty cash advantages. An imprest system is used to run and manage a petty cash fund. Under the system, the petty cash fund balance is always maintained at a fixed amount decided on when the fund is first established during an accounting period petty cash is used to pay cash expenses which are supported by petty cash vouchers. The various columns are totalled to show the reason for making payments, and then the. Importance of petty cash book imprest system answers. The cash is given to the petty cashier either on ordinary system or imprest system which are briefly explained below. In module 12, which covered the bank cash book, the advantages of paying all cash and cheques into the bank intact were evident.
The additional analysis columns are used to analyze expenditures as they arise. The base characteristic of an imprest system is that a fixed amount is reserved, which after a certain period of time or when circumstances require, because money. Petty cash is a small reserve of used for transactions and expenditures where it doesnt make sense to write cheques. Under this imprest system of petty cash book, the head cashier provides a fixed amount of money to the petty cashier in advance for meeting expenditure of a. A petty cash book is an accounting ledger may contain transactions of small amount of money for regular expenditures on small items. Head cashier will give the petty cashier the estimated amount to. This type of book is maintained just like a cash book. From the following particulars prepare a petty cash book under imprest system. The keeping of the book is not different from the keeping of the main cash book. Recording of transactions ii petty cash book solutions. Petty cash not important a book of original entry, where small, usually insignificant amounts of money are recorded. By watching this video you will understand how to record all the entries in.
Head cashier will give the petty cashier the estimated amount to start with. The imprest petty cash system is a method of accounting for petty cash expenses. Petty cash book definition, types, format, examples. The second system of petty cash is the imprest system. This book records all those expenses which are small in amount and which are incurred on regular basis.
Commission of fraud is reduced as the chief cashier verifies petty cash book alongwith vouchers and the petty cashier is more responsible. How to prepare petty cash bookpetty cash book in hindi. Definition, explanation, format and system of petty cash. Under this system a fixed sum of money is given to the petty cashier to cover the petty expenses for the month. The main advantages of petty cash book publish your article. The petty cash book is to enter how the cash available for daily expenses are spent for example milk, tea, taxi charges and. Nov 26, 2018 write up the analytical petty cash book and draft the necessary journal entries for the payments made.
The amount paid out by the chief cashier is credited in his cash book to complete the double entry. Beside petty expenses, receipts from main cash are recorded. A petty cash is a cash book used to enter all small or petty expenses obtained. Just like the cash book, the petty cash book is both a book of original entry and a ledger. Second, a check is written for this amount, and the cash is given to the cashier in charge of the petty cash fund. It may be maintained by ordinary or by the imprest system. Imprest system of petty cash fund the world impress means advance amount which is personal to certain person to make petty expenses. The petty cashier spends the imprest cash during the period. Petty cash book with imprest system simple and tabular. For smallscale business, simple petty cash book is sufficient but on a medium or large scale business number of petty expenses increases hence it is desirable to have the separate record for each type of petty expenses.
Imprest system petty cash book is quite helpful when the firm uses analytical petty cash book, wherein the book has one column to track the receipt of the amount, from the chief cashier and several other columns to write down expenses under the specific head. Petty cash is a comprehensible and common method of paying for business operating cost. At the end of the period, petty cashier submits the. It is the most scientific method to maintain petty cash. The ruling of analytical petty cashbook is given below. Generally, petty cash book is maintained on imprest system. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. The basic idea of this system is that the chief cashier gives the petty cashier a fixed amount of cash to meet his needs for the required period. From the following information, show how his petty cash book. A petty cash book is just another kind of cash book that records petty cash transactions, i. Generally petty cash book is maintained on imprest system. The imprest system is an accounting system for paying out and subsequently replenishing petty cash.
Petty cash book may be maintained by the ordinary system or by imprest. A separate column is allotted for each type of expenditure. A cash book acts like both a journal and a ledger for cash transactions. Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i. Petty cash book is a formal book of recording petty expenses which are incurred in cash. Most of the companies are using this accounting tool to kept the sufficient amount of money at office to buying small things that are require. The cash allocated for petty expenditures for a specific period is entered on the credit side of general cash book and on the debit side of petty cash book. Petty cash book can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal. Petty cash book with imprest system simple and tabular forms. Petty cash book is maintained by petty cashier and acts as the petty cash account. We hope the ts grewal accountancy class 11 solutions chapter 7 special purpose books i cash book help you. So is the case if you are looking for cbse class 11 commerce related topic. Just as in the main cash book, all payments are credited in the petty. Apr 29, 2020 such a system is known as the imprest system of petty cash.
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