What is petty cash book? How it is prepared?
1 Answer
Petty Cash Book is used for recording the payment of petty expenses, which are of smaller denominations like postage, stationery, conveyance, refreshment, etc. A person who maintains a petty cash book is known as a petty cashier and these small expenses are termed as petty expenses.
It is prepared by two methods:
1. Ordinary system: In this case, a fixed sum of money is paid to the petty cashier for the payment of petty expenses and after spending the whole amount, the account is submitted by the petty cashier to the main cashier.
2. Imprest system: In this case, a fixed sum of the money is given to the petty cashier at the beginning of a period and at the end of the period the amount spent by him is reimbursed so that he has a fixed amount at the beginning of every new period.