TheTaxHeaven Dictionary - Know the meaning of tax

Petty Cash

What is Petty Cash? 

Petty cash is a small amount of money held in a business for small, miscellaneous expenses. It is managed by a custodian and recorded on the balance sheet as a current asset. The custodian issues receipts for any disbursements and submits these to the accounting department for recording in the general ledger. Petty cash generally ranges from ₹10000 to ₹30000. 

Understanding Petty Cash 

Petty cash covers minor transactions like office supplies, stationeries, and employee reimbursements. Each department has an executive who manages the petty cash fund, ensuring it is used appropriately and replenished regularly. 

Journal Entries 

When petty cash is used, the details are recorded in the General Ledger. Any top-ups to the fund are also noted. While individual expenses made with petty cash are not part of the journal entries, when the custodian needs more cash, a new journal entry is made. This ensures that petty cash transactions are reflected on financial statements.