Petty cash what is it used for

Principles a. Number of Petty Cash Funds per Department Unless the department is very large or geographically dispersed, a single petty cash fund per department is usually adequate. Petty Cash Custodian The department head must appoint an individual to be custodian of the department's petty cash fund.

Uses of Petty Cash Funds a. Special rules apply for the reimbursement of alcoholic beverages. When Petty Cash May Not be Used Petty cash may NOT be used for: Payment for services performed by employees or non-employees Advances Gifts Personal loans and cashing personal checks Buying hazardous materials Stanford Faculty Club dues University parking fees Traffic citations Personal expenses Interest charges Social or travel club dues Expenses incurred more than days prior to the petty cash reimbursement request anything older than days must be reimbursed through the Expense Requests system Recurring expenses e.

Accounting Reimbursement for petty cash must be for the exact amount of the expense. References This policy should be read in conjunction with the following related policies and procedures. Share Print. Related Policies 3. Related Terms Audit. Fund s. Change Guidelines. Click here for guidelines on requesting a memo change.

You need to specify your work as much as possible and make sure that your transactions are business related. It is not a must to keep track of change every day but at the end of each day, ensure that you have recorded your amount in the office fund drawer.

The difference with cash payments made by customers should tally with the total petty cash expenses from the drawer. The most significant part of the petty cash is the validation process of each transaction. You need to have records that can support your deductions for the small business expenses. All in all, the more documented expenses you have, the higher the deductions you will get for you to lower the business tax bill.

The petty cash is also referred to as the cash in hand. If we have an overage of cash, we record the overage as a credit, and this has the same impact as if we are recording revenue. If there were cash overage, the petty cash account would be debited and the cash over and short account would be credited. In this case, the expense balance decreases, and the year-end balance is the net balance from all overages and shortages during the year.

If a petty cash account is consistently short, this may be a warning sign that there is not a proper control of the account, and management may want to consider additional controls to better monitor petty cash. A petty cash system in some businesses may be replaced by use of a prepaid credit card or debit card on site.

What would be the pros and cons of actually maintaining cash on premises for the petty cash system, versus a rechargeable debit card that employees may use for petty cash purposes? Which option would you select for your petty cash account if you were the owner of a small business? See this article on tips for companies to establish and manage petty cash systems to learn more.

Figure What is the best way for owners of small businesses to maintain proper internal controls? Figure Which of the following is not considered to be part of the internal control structure of a company? Figure There are several elements to internal controls. Which of the following would not address the issue of having cash transactions reported in the accounting records? Currently the purchase order is generated by the same person who receives the inventory.

Together the purchase order and the receiving ticket are sent to accounts payable for payment. What changes would you make to improve the internal control structure? Figure There are three employees in the accounting department: payroll clerk, accounts payable clerk, and accounts receivable clerk. Which one of these employees should not make the daily deposit?

Figure Which one of the following documents is not needed to process a payment to a vendor? Figure What is the advantage of using technology in the internal control system? Figure Which of the following assets require the strongest of internal controls? Figure Discuss the importance of a company having proper insurance and bonding its employees. Prepare journal entries for the following transactions:. Figure Hajun Company started its business on May 1, The following transactions occurred during the month of May.

Prepare the journal entries in the journal on Page 1. Figure Prepare a trial balance using the journal entries in Figure. Figure Lavender Company started its business on April 1, The following are the transactions that happened during the month of April. The term "cash on hand" refers to all the liquid assets a business has. It includes petty cash, but it is not just that. Cash on hand refers to all the money you have in your safe and in bank accounts, including the actual bills and coins you have in your petty cash fund.

Cash on hand may also include undeposited cash you have if you have a cash register, such as in retail. You have to keep enough cash on hand to make change for customers and accept payments in cash for those customers who do not use credit or debit cards. Set up a petty cash fund by following these six steps:. Blackline Magazine. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile.

Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads.