What Is Petty Cash?

petty cash

petty cash is the small amount used to pay for expenses for which issuing a check might not be a sensible option. The refund check can be cashed at the main cashier’s window in room 165 of the Student Services Building.

Complete an Accounts Payable Check Request; refer to section IV for instructions on completing this form. University Cashiering is responsible for approving any changes to petty cash and change funds and for maintaining records of each fund and its custodian. The Custodian should count and balance the fund each day it is used, with a minimum of one count and balance performed monthly. Documented reconciliations should be kept in the department. At all times the expenditure receipts plus cash on hand must equal the authorized amount.

Departments are responsible to ensure that petty cash expenditures do not include Utah Sales Tax. Petty Cash funds will not be replenished for amounts paid in Utah Sales Tax without exception authorization from the cognizant Dean or equivalent position. The establishment of strong internal controls for cash receipts or disbursement is necessary to prevent mishandling of funds and to safeguard against loss. One departmental employee must be designated as the “Petty Cashier”. This person will be held personally responsible for the petty cash balance and must sign the “Request for Petty Cash” form, acknowledging their acceptance of such responsibility. Ensure that the expenses are recorded in the proper accounting period.

Ii Establishing A New Petty Cash Or Change Fund

Though the petty fund is available in cash and can be considered cash on hand, the cash on hand is not always petty cash. Thus, we can say it is not equivalent to cash on hand. ReconciliationReconciliation is the process of comparing account balances to identify any financial inconsistencies, discrepancies, omissions, or even fraud. Other ExpenseOther expenses comprise all the non-operating costs incurred for the supporting business operations. Such payments like rent, insurance and taxes have no direct connection with the mainstream business activities.

Establish the fund by making sure you’re putting enough in to handle most cash purchases for the time period you choose. It’s no good putting in £10 for the week when you know the petty expenses will be a lot more. Original requests for petty cash funds must be submitted to the Controller for approval using the “Request for Petty Cash” form. Petty cash funds may be initiated with balances of $25 or $50. Larger requests for petty cash will only be approved when supported by specific documentation regarding need. Petty cash accounts are used by departments for small purchases, reimbursements and other transactions for which the use of university checking accounts would be inefficient or impractical.

  • Templates for recording account data with customizable checklists ensure standardized petty cash records across the organization.
  • Prior to replenishing the fund, the custodian should make sure that cash on-hand plus receipts equals the original balance of the fund.
  • Petty cash is a small amount of money that businesses keep on their premises and used to describe small company transactions.
  • Complete an account edit in KFS to close the petty cash/cash drawer account.
  • Software also provides standardized templates to ensure that petty cash funds are managed consistently across the organization.

When discrepancies are identified in petty cash funds, the product automates the workflow for their review by accountants. Your business will need to have a petty cash fund for these or similar small expenses, and you will need to have a process in place to properly account for those purchases. Petty cash is a relatively small amount of cash on hand available for employees of a business to make small, non-recurring purchases easily and quickly. While non-cash transactions are increasingly becoming the norm for most transactions, cash is still needed to cover small, “one-off” purchases.

Financial Services Serves U

Submit the form along with supporting documentation to the Cash & Controls Team at . Enter „Petty Cash Termination-Custodian Name“ in the email subject line. Enter „Petty Cash Decreasing-Custodian Name“ in the email subject line. Complete the Cash Settlement & Account Termination FormMust be signed and dated by the fund applicant/custodian and department approver/manager. The form must be signed by the current custodian as well as the new custodian and the immediate supervisor and department head.

petty cash

At the time of the audit, the petty cash custodian must provide a full accounting of the fund. It is the sole responsibility of the department to ensure that the funds are secured at all times. Once approval is received to increase your petty cash/cash drawer, complete a DV, payment reason “Z”, for the additional funds using the employee record instead of the Petty Cash Vendor record. The object code for this transaction is petty cash or cash drawer. Petty cash funds provide a convenient way to pay for small expenses. The university discourages the establishment and/or use of petty cash funds and has developed alternative means of conducting business to replace using cash as a payment method.

Appoint A Custodian

In addition, all funds should be replenished at fiscal year end so there are no outstanding receipts as of June 30th. Used to replenish the cash in the petty cash account.This account is not changed unless there is a change in the value of the petty cash/cash drawer. Used to reduce the petty cash/cash drawer on hand.This account is not changed unless there is a change in the value of the petty cash/cash drawer. Used to record the original petty cash/cash drawer value. This account is not changed unless there is a change in the value of the petty cash/cash drawer.

Periodic unannounced audits of the petty cash/cash drawer fund should be conducted by the supervisor. The university does not pay taxes on items purchased through petty cash.Tax on entertainment expenses at local restaurants is allowed. A ServiceNow ticket will be automatically created upon receipt.

The cashier creates a new check in the amount of the receipts, and swaps the check for the receipts. The petty cash journal entry is a debit to the petty cash account and a credit to the cash account. Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs. Examples of these payments are office supplies, cards, flowers, and so forth.

Opening A Fund

Departments should evaluate their business needs and limit the petty cash account to the lowest amount that will meet those needs in a 30-day period. To help departments pay for small expenses for everyday business and have cash on hand for these situations, a petty cash fund can be set up within the department. To establish a fund, the dean, director or department chair will need to submit a letter to the University Controller with a list of requirements and follow the procedure listed below. The petty cash fund administrator within the department is responsible for implementing proper controls, retaining receipts and safeguarding the cash.

Any discrepancies identified, should be investigated and adjusted promptly. Petty cash isn’t designed to replace or avoid accounting control of expenses. It’s all about making it convenient to make small purchases where you don’t need to write cheques. So, establish a maximum transaction amount to be handled through the petty cash system – like £25. Petty cash and change funds should be secured in a safe or locking file cabinet when not in the presence of a designated cashier.

Example Of Petty Cash Accounting

The alternate does not have authorization to make any changes to the account. Complete this form to update Petty Cash/Cash in Drawer fund custodian information. Departments should notify Accounting when a petty cash custodian changes, and send a reconciliation of the account. Set up the petty cash custodian as a Petty Cash Custodian Vendor Type . Allows you to use payment reason „Petty Cash Custodian Replenishment,“ which has more object codes available than the „Reimbursement of Out-of-Pocket Expenses“ payment reason. Receipts should be given for all payments from petty cash.

The cashier will also sign the replenishment request and then will enter the expense and cash receipt information and will issue cash replenishment. The petty cash custodian refills the petty cash drawer or box, which should now contain the original amount of cash that was designated for the fund. The cashier creates a journal entry to record the petty cash receipts. This is a credit to the petty cash account, and probably debits to several different expense accounts, such as the office supplies account . The balance in the petty cash account should now be the same as the amount at which it started.

Let’s say somebody has a small team of five people and once a month, they’re treated to a pizza which costs £50 each time. That’s £600 a year and not keeping a record of this https://www.bookstime.com/ outlay means £600 in lost profit.

petty cash

Completion of the UC Learning eCourse for cash handling is required annually. For annual fiscal year closing, each June 30, all pending petty-cash reimbursements must be submitted to Disbursements.

However, in limited circumstances when a need is established and documented a small departmental petty cash fund may be approved. Once you’ve completed the basics, it’s time to stick some money into the petty cash box.

If the remaining funds do not equal the exact amount of the day sales, an additional line may be added to the sales deposit to account for this. The sales amount would either be increased (overage, +amount) or decreased (shortage, -amount) for that day using object code 6400 Over/Short – Cash. A reconciliation of the petty cash fund/cash drawer should be completed and reviewed by the custodian’s supervisor periodically. Annually, departments should examine whether their petty cash account is still required to meet the department’s business needs, or if alternative disbursement methods could suffice. Funds are considered inactive if they have no activity during a fiscal year. With this solution, petty cash reconciliations follow an automated workflow that ensures proper review and approval of account data, and maintains appropriate segregation of duties.

If payment is made to anonymous research subject, the receipt or log must be signed by the Project PI. For reimbursements, a Petty Cash Voucher should be completed. Original receipts must accompany each approved expenditure for reimbursement.

The initial petty cash journal entry is a debit to the petty cash account and a credit to the cash account. We provide a wide-range of financial services including accounts payable, accounts receivable, cash handling and banking, and campus procurement cards. We also assist with travel and entertainment expenditures. To establish a new petty cash or change fund, complete the request form for Establishing a Petty Cash or Change Fund and send it to University Cashiering for approval. Cash and petty cash accounts are both asset accounts. When you open the petty cash fund, the money can be transferred between the accounts with no effect on the balance of your assets.


Petty cash and change funds are subject to periodic cash counts without prior notice. A department’s change fund is used to provide change for cashiers and customers who pay by high-denomination bills. While it is important to have a thorough process in place for documenting the transactions in the petty cash fund, a traditional paper-based approach has many limitations. In addition to a log, your company’s policies should include a requirement for receipts to be provided for every purchase. These will provide detailed vendor or cash register receipts, which itemize the item or service purchased, the date, and the amount. Not surprisingly, petty cash funds are vulnerable to misuse and could even lead to outright fraud. For example, anyone who requires such cash should be required to write their name, the date, time, and the specific amount and description of the transaction.

If there are receipts that need to be credited against the account, prepare a Distribution of Income and Expense e-doc, and attach the receipts as backup. 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. Complete the Establish a New Petty Cash/Cash in Drawer Fund or Change Initial Amount Form. Whenever possible, do not pay sales tax on purchases, Wentworth is an educational institution and is exempt from all sales taxes. Exemption are available from Purchasing to be presented to vendors as necessary. Petty cash funds must be closed out and reconciled at the end of each fiscal year.

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