Petty Cash Systems

Module 3:
Cash, Receivables, Payables

Duration:
45-60 minutes

Level:
Beginner to Diploma-Level

➛ Explain the purpose of petty cash.

➛ Distinguish between imprest and non-imprest petty cash systems.

➛ Record petty cash expenses correctly.

➛ Prepare petty cash replenishment entries.

➛ Apply basic controls over petty cash.

➛ Petty Cash
➛ Petty Cashier
➛ Imprest System
➛ Non-Imprest System
➛ Petty Cash Voucher
➛ Replenishment
➛ Float
➛ Minor Expenses

Petty cash is used to pay for

➛ Small office supplies
➛ Transport fares
➛ Minor repairs
➛ Refreshments

It avoids writing cheques for very small amounts.

1. Imprest System
➛ A fixed amount (float) is set
➛ Vouchers record each payment
➛ Cash + vouchers = original float
➛ Replenished periodically

Most common and best for control


2. Non-Imprest System
➛ No fixed balance
➛ Cash is topped up when low
➛ Poor control system

Not recommended for large businessesng

Each petty cash payment must have

➛ Date
➛ Amount
➛ Purpose
➛ Signature

Vouchers support accurate records and prevent misuse.

Good controls include

➛ Keeping petty cash in a locked box
➛ Appointing one petty cashier
➛ Issuing vouchers for all payments
➛ Regular replenishment and checking

When replenishing
➛ Debit expense accounts
➛ Credit cash/bank

Example
➛ Dr Stationery Expense
➛ Cr Bank

State whether each situation uses
Imprest system | Non-imprest system

➛ Petty cash is always maintained at 2,000.
➛ Cash is added whenever the box is empty.
➛ Vouchers plus cash equal the float.
➛ No fixed limit for petty cash balance.

State whether the expense is suitable for petty cash

➛ Taxi fare
➛ Office rent
➛ Postage stamps
➛ Monthly salaries

Petty cash float = 1,500

Vouchers show
➛ Stationery = 400
➛ Transport = 300
➛ Refreshments = 200

Tasks
➛ Total vouchers
➛ Cash remaining
➛ Amount needed for replenishment
➛ Journal entry required

A small business keeps petty cash of 3,000 under the imprest system.

During the week, vouchers show
➛ Courier charges = 600
➛ Office supplies = 900
➛ Tea and snacks = 300

Questions

➛ How much cash remains?

➛ How much should be replenished?

➛ Write the replenishment journal entry.

➛ Name two controls that should exist over petty cash.

➛ What is the purpose of petty cash?

➛ Which petty cash system is most commonly used?

➛ What is a petty cash voucher?

➛ How is petty cash replenished under the imprest system?

➛ True or False | Large expenses should be paid from petty cash.

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Answers ➧ Here

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Accounts Receivable ➧ Here