What is Petty Cash? How to Manage it? - QuickBooks Singapore (2024)

FAQs

What is Petty Cash? How to Manage it? - QuickBooks Singapore? ›

Petty cash allows businesses to make minor purchases without providing a receipt through an expense reporting system, which can reduce the time spent bookkeeping for small items. It also gives businesses a readily available source of funds.

Petty cash is a convenient supply of cash you can use to pay small expenses. Here's a few tips on how to manage petty cash, and how to track it in QuickBooks Online.

A petty cash fund is a small amount of company cash, often kept on hand (e.g., in a locked drawer or box), to pay for minor or incidental expenses, such as office supplies or employee reimbursem*nts. A petty cash fund will undergo periodic reconciliations, with transactions also recorded on the financial statements.

Petty cash is a current asset. Current assets are assets that provide economic benefit within one year. Since petty cash funds can resolve scenarios with readily available cash, this can be considered as providing economic benefits.

Petty cash falls under the head of current assets in the balance sheet. This is on the grounds the assets that are yet to be determined on the sheet are arranged in their order of liquidity. Petty cash being exceptionally liquid, it shows up close to the highest point of the balance sheet.

Petty cash is a small amount of money a company keeps for small, incidental expenses. These minor payments include office supplies, stationery, meals, client lunch, stamps, etc. The number of petty cash funds could change depending on the organization's size.

All Petty Cash Funds must be stored in a secured device such as a safe or cash box in a locked cabinet. Only the Petty Cash Fund custodian should have keys to the box and cabinet. Funds should never be left unattended and unsecured. Funds within a box need to be locked and behind locked doors when not attended.

Petty cash is a current asset and should be listed as a debit on the balance sheet. When first funding a petty cash account, the accountant should write a check made out to "Petty Cash" for the desired amount of petty cash and then cash the check at the company's bank.

How to monitor petty cash? ›

Petty cash is a current asset listed as a debit on the balance sheet. An accountant will typically write a cheque to "Petty Cash" to fund the petty cash account and cash this cheque at the company's bank.

To set this up in QBO, click the gear icon in the upper right of the screen and then Chart of Accounts. Click New in the upper right corner. Select “Bank” for Account Type, “Cash on Hand” for Detail Type, and click Save and Close.

When your petty cash cashier puts money into the petty cash fund, they must create a journal entry in your books. The entry must show an increase in your Petty Cash account and a decrease in your Cash account. To show this, debit your Petty Cash account and credit your Cash account.

Petty cash is a small amount of money that businesses keep on their premises and used to describe small company transactions. It's essential so that you don't need to make expenses from your own pockets and also so there isn't a mismatch in balance sheets.

The small expenses that your business makes with petty cash might not seem like a big deal, tax-wise. But they can add up. If you average $100 petty cash expenses per month, that's $1,200 you could potentially write off your tax bill next year!

Petty Cash Book is used for recording payment of petty expenses, which are of smaller denominations like postage, stationery, conveyance, refreshment, etc. Person who maintains petty cash book is known as petty cashier and these small expenses are termed as petty expenses.