PETTY CASH BOOK ENTRY
Thus, the book is part of a manual record-keeping system. There are two primary types of entries in the petty cash book, which are a debit to. Besides maintaining a main or general cash book, many companies also maintain a small cash book known as petty cash book to record small day to day . Guide to what is Petty Cash Book. Here we discuss the format of Petty Cash Book , Types of Petty Cash Systems including the Ordinary and Imprest System.
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A petty cash book is a ledger kept with the petty cash fund to record amounts that For example, if you bought a screw at the corner hardware store, you might. In this lesson, we'll review what petty cash is used for and describe how. how funds are used and allocated throughout a company's accounting books. The journal entry to start a petty cash fund only happens once - when the petty cash is . The petty cash account is a current asset and will have a normal debit . Thus, using a petty cash fund avoids the need for making many entries for small.
Principles of Accounting.
How to Prepare a Petty Cash Book
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3 Stages of Operating Petty Cash Fund
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Format of the Petty Cash Book
Submit Comment. Notify me of new posts by email. Related Topics: Join Us. Present Annuity Prob. Search Search for: Back To Principles of Accounting. Kiana Spiece on March 22, at 2: Wasting Assets: The assets that depreciate through "wear and tear", whose values expire with lapse of time or that become exhausted through working are known as wasting assets. This is a subclass of fixed assets e. Intangible or Fictitious Assets: There are assets which have no physical existence. Which can neither be seen with eyes not touched with hands.
These are called intangible assets or fictitious assets. They do not represent any thing valuable. They include debit balance of profit and loss account, goodwill etc.
Contingent Assets: A contingent asset is one which comes into existence upon the happening of a certain event. If that event happens the asset becomes available, otherwise not. For example uncalled capital of a limited company.
Outstanding Assets: Expenses paid in advance i. Classification of Liabilities: The liabilities of a business are classified as follows: Fixed Liabilities: These are the liabilities which are payable immediately or in the near future. These liabilities are payable after a long period.
Long term loans, capital of the proprietor are the examples of such kind of liabilities. Current Liabilities: These are the liabilities which are payable immediately or in the near future, such as creditors, bank loans etc. Contingent Liabilities: Contingent liabilities are those liabilities which arise only on the happening of some event. The event may or may not happen.
Thus a contingent liability may or may not involve the payment of money. Examples of contingent liabilities are: 1. Liabilities on bills discounted: In case the bill is dishonored by the acceptor, the holder may be called upon to pay the amount to the discounter.
Liability under guarantee: In case the debtor fails to fulfill his obligation, the man who has given a guarantee or surety have to make good the loss to the creditor.
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Liability in respect of a pending suit: A suit pending against a person in a court is a contingent liability because if the decision of the court goes against him, he may thereby become liable to pay compensation. Contingent liabilities are not recorded in the books not they are included in the balance sheet.
They are simply referred to by way of foot notes on the balance sheet. Outstanding Liabilities: Outstanding expenses and unearned income are examples of outstanding liabilities. Classification of Capital: The surplus or excess of assets over liabilities is called the capital or the proprietor.
Capital may be classified as follows on the basis of the capital fund invested: Trading Capital: The portion of the funds of a concern which is represented by the fixed and floating assets is called the trading capital Fixed Capital: The portion of the funds of a concern which is represented by the fixed assets is called fixed capital.
Circulating Capital: The portion of the funds of a concern which is represented by the floating or circulating assets is called the circulating or floating capital. Working capital: It is the amount which remains for the working of the business after the liabilities for acquiring the fixed assets have been discharged.
The excess of the floating assets over the floating liabilities is also called the working capital. Loan Capital: The debentures and other fixed loans are sometimes called loan capital. Watered Capital: It is represented by fictitious assets.
Petty Cash Book | Example | Subsidiary Books
Valuation of Assets: In order to exhibit a true financial position of a business , assets are to be valued carefully. The basis upon which the various assets are valued depends to some extent on the nature of the business and the objects for which the assets are held.For example, On June 1, , Rs.
But, that is not always the case. Petty cash fund is created for a definite amount of money. Be sure and make your journal transactions from the source documents first. Page no. He will be paid Rs. For small-scale business, simple petty cash book is sufficient but on a medium or large scale business number of petty expenses increases hence it is desirable to have the separate record for each type of petty expenses.
Instead, at the time of replenishing the fund, every expenditure is taken into consideration. Post navigation. In this system, Head cashier pays a fixed amount to the petty cashier for a fixed time it may be for a day, a week or a month 3.