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by Ariba Mahmood3 views·Updated May 7, 2021
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  1. Welcome to the Stream Cast.
  2. Today we will be discussing petty cash.
  3. Petty cash is a certain amount of cash that is
  4. kept on hand in order to make small purchases.
  5. The petty cash fund is used for these purchases, as
  6. it is not sensible to disperse a check usually used
  7. for expenses such as postage office supplies and rain, but
  8. the employees who purchases the process.
  9. The process involves three steps, establishing fund making payments from
  10. the fund and replenishing the fund step one.
  11. Most companies will keep anywhere between $30 and $300 for
  12. a petty cash fund, depending on what good or service
  13. they provide.
  14. The company will sign a trusted employee known as the
  15. petty cash custodian to oversee the payments of the fund
  16. and keep it in a safe place.
  17. Step to to use the fund.
  18. An employee can ask to directly access the funds or
  19. spend their own money and later seek reinvestment via the
  20. custodian. In order to receive cash from the fund, the
  21. custodian must fill out of petty cash voucher, which will
  22. detail the amount of cash the employee requesting it, the
  23. date and the reason it is being requested.
  24. Here is an example of what a petty cash voucher
  25. looks like.
  26. Step three replenishing the fund in order to replenish the
  27. fund. The petty cash custodians must provide a copy of
  28. the voucher in order for it to be recorded in
  29. a general entry.
  30. Petty cash is only recorded in the journal when replenishing
  31. the, On one April, made with love handmade crafts company
  32. cashes a check of $150 in order to establish their
  33. petty cash fund.
  34. The accounts are reviewed at the end of the month,
  35. on 30 April.
  36. When the fund is first established, an entry is made
  37. in order to keep a record of when it was
  38. created at the scene below the fund was established on
  39. the first of april, with petty cash being divided as
  40. the credit credited account being cash during the month of
  41. april eight of Love made the following purchases they spent
  42. for $32 on postage, $59 and office supplies and $24
  43. and miscellaneous items.
  44. Step three.
  45. At the end of the accounting period, the team reviews
  46. the purchases.
  47. Been using the petty cash and creates a journal entry
  48. in order to replenish the fund.
  49. There are two examples that will be shown example.
  50. One is of a fund with their excess or shortage
  51. of cash.
  52. An example to is one with a $7 shortage.
  53. This example shows that at the end of the month
  54. the accounts divided are the costs incurred, postage suppliers and
  55. miscellaneous items are divided while cash is credited.
  56. This will mean $115 of punishment is required.
  57. If for some reason the amount the company has on
  58. record and the amount recorded on the vouchers is not
  59. people, then the difference is recorded under the account called
  60. cash shortened over.
  61. If there is a shortage, this account is debited, but
  62. if there is an excess amount of cash, this account
  63. is credited.
  64. The example below shows that you to the shortage.
  65. The cash shortened over account is debited, bringing the total
  66. amount needed to be replenished to $122.
  67. Thank you for listening.
  68. I hope that you now understand the concept of petty
  69. cash and it's important to a business.