Petty Cash Expenses

The best way to identify when a Petty Cash system is in use is when you have a petty cash book and you use petty cash vouchers. You keep money in the petty cash box to meet small day to day expenditure. Typical expenses are milk for the canteen or buying biscuits for the visitors.

You start the month with a cash float in the petty cash box and each time you pay out for something you get a receipt (little invoice) for each amount spent. You get the person claiming the expense to sign the petty cash voucher and attach the petty cash voucher to the receipt.

You record each numbered voucher in a petty cash book and analyse the type of expense incurred. At the end of the month you total the book and you have a total for each type of expense e.g. canteen costs.

You should set up a supplier account in your creditors ledger for Petty Cash and record each cheque written for Petty Cash in this account and also post the summary totals from the Petty Cash book into this account. This will now give you a easy to read summary of petty cash for every month and also show you the total for the year spent on petty cash.

Expenses

Expenses, Sales Rep Expenses and Directors Expenses are all the same in that someone else paid for the expense and they will then be refunded for that expense at a later date. They are different to Petty Cash expenses in that they are usually larger amounts for which there would be insufficient money in the petty cash box to meet the cost.