Record used to track small routine cash disbursements, usually under an imprest system with periodic replenishment and review.
A petty cash book is a record used to track small day-to-day cash payments that are not practical to process through the main cash disbursement cycle. It often operates alongside an imprest fund that is replenished back to a fixed amount.
Small cash payments are easy to overlook or misuse. The petty cash book provides control over minor spending by requiring documentation, coding, and periodic reconciliation between vouchers, recorded spending, and cash remaining on hand.
The business sets a fixed petty cash float, such as 300. As small expenses are paid, the custodian records each disbursement and keeps a receipt or voucher. When the fund runs low, the business replenishes it for the exact amount spent and usually records the refill through a journal entry to the appropriate expense accounts.
| Item Tracked | Why It Matters |
|---|---|
| Opening float | Establishes the controlled amount of cash on hand |
| Voucher or receipt | Proves the payment and business purpose |
| Expense category | Supports correct posting to the ledger |
| Cash remaining | Allows reconciliation of the fund |
A petty cash fund starts at 300. During the week, the office spends 42 on postage, 18 on local transport, and 25 on office supplies.
| Component | Amount |
|---|---|
| Cash remaining in box | 215 |
| Receipts and vouchers | 85 |
| Total accounted for | 300 |
To replenish the fund, the business records:
| Account | Debit | Credit |
|---|---|---|
| Postage Expense | 42 | |
| Travel Expense | 18 | |
| Office Supplies Expense | 25 | |
| Cash | 85 |
A petty cash book is not a substitute for the main cash book. It covers only small controlled disbursements. It is also not the same as a petty cash balance itself. The balance is the money on hand, while the petty cash book is the record that explains what happened to the fund.