Entries Are Made to the Petty Cash Account When

Petty cash is a small amount of money that is kept on hand to cover small expenses. These expenses may include things like office supplies, postage, or travel expenses. Petty cash is typically kept in a locked box or drawer, and is controlled by a designated employee.

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When a petty cash expense is incurred, the designated employee will typically fill out a petty cash voucher. The voucher will include information about the expense, such as the date, the amount, and the purpose of the expense. The petty cash voucher is then signed by the designated employee and submitted to the accountant for reimbursement.

When to Make Petty Cash Entries

There are certain times when it is appropriate to make petty cash entries. These times include:

When a business incurs a small expense that cannot be paid by check or credit card.
When a business needs to make a payment to an individual who does not accept checks or credit cards.
When a business needs to make a payment for an expense that is not reimbursable by the business.

It is important to note that petty cash should not be used for large or personal expenses. Petty cash should only be used for small, necessary expenses that cannot be paid for by other means.

Best Practices for Managing Petty Cash

There are certain best practices that businesses can follow to ensure that their petty cash is managed properly. These best practices include:

Establishing a clear petty cash policy. The policy should outline the purpose of the petty cash fund, who is authorized to use it, and how it should be reimbursed.
Appointing a designated employee to be responsible for the petty cash fund. The designated employee should be responsible for maintaining the fund, making payments, and submitting reimbursement requests.
Requiring employees to submit petty cash vouchers for all expenses. The vouchers should be signed by the employee and should include information about the date, the amount, and the purpose of the expense.
Reconciling the petty cash fund on a regular basis. The reconciliation should ensure that the fund is being used properly and that there are no unauthorized or missing funds.

Petty Cash Reconciliation

Petty cash reconciliation is the process of comparing the cash on hand to the amount that should be on hand, according to the petty cash ledger. The reconciliation should be performed on a regular basis, typically monthly.

To perform a petty cash reconciliation, the following steps should be taken:

Add up the cash on hand.
Add up the outstanding petty cash vouchers.
Subtract the total of the outstanding petty cash vouchers from the total cash on hand.
The resulting amount should be equal to the petty cash balance in the petty cash ledger.

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