Petty Cash Financial Services The University of Chicago

Petty cash accounting

If you don’t know how to account for your business’s petty cash fund, don’t worry. Complete an Electronic Accounts Payable Check Request via the Duke@Work portal to document the payments made and to clear the funds advanced. Attach scanned copies of all original receipts and supporting documents. The fund should be reimbursed to its original authorized amount at least once each fiscal month. To ensure all reimbursed expenses are properly recorded in the proper fiscal year, all funds MUST be reimbursed by the last week of June .

Petty cash accounting

The custodian is responsible for obtaining the original receipt for each transaction. Receipts must correspond to the description of the petty cash ticket and account number designated on the ticket. Even if the amounts are low, petty cash expenditures still matter. It’s why you rarely see businesses pay with actual cash for huge expenditures.

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There is a Cashier , an Authorizer , and a Receiver for proper petty fund transaction implementation. Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you. Tim is a Certified QuickBooks Time Pro, QuickBooks ProAdvisor, and CPA with 25 years of experience.

Upon receipt of the reimbursement check, a Report of Money Received Form should be completed identifying that the cash will be deposited in the FAS Petty Cash account. Departmental deposits are processed by the Maroon Financial Credit Union. The university does not pay taxes on items purchased through petty cash.Tax on entertainment expenses at local restaurants is allowed. Petty cash may be used to reimburse an individual for a purchase that was made using his/her personal funds. Upon presentation of original, itemized receipts to support the expenditure, the individual will be reimbursed for the exact amount of the purchase.

Require Receipts

Drive accuracy in the financial close by providing a streamlined method to substantiate your balance sheet. While a petty cash fund may not be necessary if you work solo, if you have even one employee, it may be worth it to set up a petty cash fund to manage those unexpected expenses properly. If you have an office manager, they’re the most likely choice to manage the petty cash fund.

  • In the petty cash policy document, we should state that the petty cash fund is $500 with Heather Smith as the custodian.
  • We’re dedicated to delivering the most value in the shortest amount of time, equipping you to not only control close chaos, but also foster F&A excellence.
  • At a minimum, you’ll want to update your petty cash account once a month.
  • If the remaining balance is more than what it should be, there is an overage.
  • Tim worked as a tax professional for BKD, LLP before returning to school and receiving his Ph.D. from Penn State.
  • The petty cash funds which currently exist in various departments are managed by a «petty cash custodian.»

The transaction that replenishes the petty cash fund is recorded with a compound entry that debits all relevant asset or expense accounts and credits cash. Consider the journal entry below, which is made after the custodian requests $130 to replenish the petty cash fund and submits vouchers that fall into one of three categories.

Bank – Transactions and Reconciliations

Basically, whenever you remove cash from the petty cash fund, it will have a corresponding credit entry to the petty cash fund account. This is so that all petty cash transactions are recorded in the same month that they are incurred. For example, if you find that your business spends $250 on small expenditures per week, you may want to set your petty cash fund for the same amount or maybe a larger amount. To reiterate, a petty cash fund is a small amount of cash that is set aside to pay for small expenditures. This article is made to teach you the basics of Petty cash accounting.

  • Petty cash reconciliation is required to be done at regular intervals to make sure the fund balance is correct.
  • Funds should be reconciled at least monthly and every time a Disbursement Voucher is requested to replenish the fund.
  • Departmental deposits are processed by the Maroon Financial Credit Union.
  • In financial accounting, the petty cash account is a current asset.

Charge each expense for which there is a supporting document to the appropriate cost object and G/L Account. The Fiduciary should document this quarterly review and maintain the documentation in the department. Complete aEstablish a New Petty Cash/Cash in Drawer Fund or Change Initial Amount Form. Completing the form will send a request to Accounting where the request will be approved or denied.


To record the petty cash transactions for August, you would need to record the expenses as a journal entry. The petty cash log should include the date, details of the transaction, the cash you put into petty cash, the amount distributed, and a running balance. Once your running balance hits your replenishment amount, you’re ready to write a check to bring the petty cash total back to the original funded amount. Whatever you decide, it’s important that only one person have access to the fund at any time, to avoid unaccounted for withdrawals and/or theft. Once you determine who will handle petty cash, you’re ready to cash a check and deposit the funds into the petty cash lockbox.

You must record petty cash transactions, even if you think they’re too low to matter. Without a petty cash system, using small cash amounts periodically can add up to a major discrepancy in your books. And when you maintain records of all your business’s expenses, you can claim tax deductions. Petty cash, as the name suggests, is a small amount stored in office boxes or drawers to be used to pay for small expenses, including employee meals and snacks.

Note that it’s a good idea to set a maximum dollar amount for allowable expenses. Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check. Petty Cash is also the title of the general ledger current asset account that reports the amount of the company’s petty cash. The amount of petty cash will vary by company and may be in the range of $30 to $300. A petty cash fund can be used for office supplies, cards for customers, flowers, paying for a catered lunch for employees, or reimbursing employees for expenses. Accounting Services is responsible for final approval and creation of the petty cash account in FAS. Once approved, Accounting Services will request a check payable to the custodian at the address provided on the form (in person check pick-up is no longer allowed).

Petty cash accounting

To reconcile, you’ll need to match your receipts with the amounts recorded on the petty cash form. The petty cash log is one of the most important components of managing petty cash. Any transactions made into or out of petty cash need to be recorded on the petty cash log. It’s also important that any money disbursed out of the petty cash fund have a receipt. If you’re ready to set up a petty cash fund for your office but aren’t sure where to begin, follow the simple steps below to have your petty cash fund operational in no time. To begin, have a secure place to store your petty cash funds, such as a lockbox or locked drawer.

If you only have a few employees, fund management may fall to you. ReconciliationReconciliation is the process of comparing account balances to identify any financial inconsistencies, discrepancies, omissions, or even fraud. Make sure that there is a reasonable amount of money in the petty cash fund and that it is enough to meet your company’s needs.

Petty cash accounting

To initially fund a petty cash account, the accountant should write a check made out to «Petty Cash» for the desired amount of cash to keep on hand and then cash the check at the company’s bank. The journal entry on the balance sheet should list a debit to the business bank account and a credit to the petty cash account.

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