Definition of Petty Cash

This time we will discuss the meaning of petty cash along with the objectives, characteristics, methods and documents needed to support petty cash. Happy reading …

 

Table of contents :

Definition of Petty Cash

Understanding Petty Cash According to Experts

Purpose The establishment of petty cash

Characteristics of Petty Cash

Petty Cash Recording Method

Fixed Method (Imprest fund system)

Method Change (Fluctuating fund system)

Documents Required in Petty Cash Fund Management

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Definition of Petty Cash

Petty cash ( Petty Cash ) are some of the fund established primarily to expenses that are routine and relatively small in number. Petty cash is used to finance management expenses which are relatively small, for example, such as entertainment funds for clients and co-leaders and consumption funds for meeting purposes.

 

petty cash accounting journal

 

Understanding Petty Cash According to Experts

According to Kusnadi , petty cash funds are funds that include payments, which do not use checks as a means of payment but instead use cash.

 

According to Henry Simamora , petty cash is cash funds that are used to pay relatively small amounts of expenses.

 

According to Weygant , Petty cash is “a petty cash fund is a cash fund used to pay relatively small amount but still maintain satisfactory control”.

 

According to Soemarso , petty cash is an amount of cash that is set aside within the company and is used to serve certain expenses which are not large amounts and in the form of other expenses made with the bank (by check).

 

According to Mardiasmo , the petty cash fund is an amount of cash in a company that is specially provided to pay expenses which are small and uneconomical if paid by check.

 

According to Wikipedia , the petty cashbook is a relatively very small record of purchases compared to other purchases, usually controlled by a fixed system.

 

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Purpose The establishment of petty cash

Handling office equipment / supplies problems experienced by a division in the office.

Avoiding uneconomical payment methods is also impractical for relatively small and sudden expenses.

Easing the burden on employee staff in providing maximum service to customers as well as to leadership business relations.

Speed ​​up the activities of superiors who use funds suddenly and also not previously planned.

Characteristics of Petty Cash

The characteristics of petty cash are as follows:

 

Limited number. that is, the amount must not exceed or be less than a certain amount agreed upon by the company management.

Used to fund expenses that are routine (every day).

Petty cash funds are generally stored in a special place, using a small box known as a petty cash box.

Held by employees or financial officers who are at the entry level.

This method includes management stages in the use of existing funds, so that when the report on the use of petty cash is requested by the parties concerned it can be shown immediately and completely without any errors.

 

Petty Cash Recording Method

Fixed Method (Imprest fund system)

Fixed Method is a method of petty cash bookkeeping where the petty cash account is always a fixed amount. Every time a cash disbursement occurs, the petty cash holder does not immediately record it, but only collects evidence of the expenditure transaction.

 

The characteristics of the Fixed Method (Imprest fund system):

 

The evidence of the use of petty cash funds is collected by the petty cash manager.

Petty cash fund is replenished by withdrawing a check which is the same amount as the used petty cash fund so that the amount of petty cash funds returns to the amount that was originally set.

Fixed method operational steps:

 

The establishment of a petty cash fund in which petty cash holders are given a certain amount of cash which will later be paid for expenses that are expected to meet their needs within a certain time.

Petty cash funds are used for payment of expenditure transactions.

After the petty cash fund runs out / almost runs out, the cashier re-forms the petty cash fund, filling it in the nominal amount of the expenses incurred.

Also Read:   Definition of Debit and Credit

Method Change (Fluctuating fund system)

The variable method is a method of filling and controlling petty cash in which the amount of petty cash will always change (according to need).

 

This system requires that the nominal amount of petty cash is not fixed but according to needs. For example, when making the policy for the first time, the company set a nominal amount of petty cash of Rp. 5 million then used it as needed and then petty cash was replenished.

 

The variable method is a method of filling and controlling petty cash in which the amount of petty cash will always change (according to need).

 

This system requires that the nominal amount of petty cash is not fixed but according to needs.

 

For example , when making the policy for the first time, the company set a nominal amount of petty cash of Rp. 5 million then used it as needed and then petty cash was replenished.

 

The characteristics of the Fluctuating fund system:

 

The formation and replenishment of petty cash funds are recorded in the debit in the petty cash account.

Evidence of petty cash disbursements is recorded in the petty cash journal book by debiting the accounts related to the use of the petty cash account credit.

The amount of petty cash funds provided fluctuates according to the development of activities of the users of funds.

Documents Required in Petty Cash Fund Management

There are two documents or evidence of use of petty cash, namely evidence of internal expenditures and evidence of external expenditures. Equipment or documents needed in petty cash fund management, namely:

 

Evidence of cash out

This document is useful in order to order cash disbursements from the accounting function to the bulk cash function listed in the document. In the petty cash fund system, this document is needed when replenishing petty cash funds.

Check

Check is a document used to instruct a bank to pay a sum of money to a person or entity whose name is listed on a check or check carrier.

Petty cash disbursement request

This document is used by petty cash users to request a sum of money from petty cash fund holders. For petty cash fund holders this document is useful as proof of expenditure. This document will be kept by the petty cash holder under the name of the petty cash disbursement.

Evidence of petty cash disbursements

This document is prepared by users of petty cash funds to account for the use of petty cash funds. This document is attached with evidence of petty cash disbursements and submitted by the petty cash fund user to the petty cash fund holder.

Petty cash replenishment request

This document is made by the petty cash fund holder to ask the debt department to make cash out evidence for replenishing petty cash funds.

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