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BHT1333 Chapter 7

The document discusses the petty cash system and imprest system used in businesses. It explains that petty cash is a small fixed amount of cash used to pay minor daily business expenses. Under the imprest system, the petty cash fund is reimbursed in full at fixed periods to always maintain the original set amount. Source documents such as receipts and vouchers are used to record petty cash transactions which are then entered into a petty cash book. At the end of each period, amounts are transferred from the petty cash book to relevant general ledger accounts. An example petty cash transaction journal is provided to illustrate the imprest system.

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Weiqin Chan
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45 views

BHT1333 Chapter 7

The document discusses the petty cash system and imprest system used in businesses. It explains that petty cash is a small fixed amount of cash used to pay minor daily business expenses. Under the imprest system, the petty cash fund is reimbursed in full at fixed periods to always maintain the original set amount. Source documents such as receipts and vouchers are used to record petty cash transactions which are then entered into a petty cash book. At the end of each period, amounts are transferred from the petty cash book to relevant general ledger accounts. An example petty cash transaction journal is provided to illustrate the imprest system.

Uploaded by

Weiqin Chan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BHT1333 HOSPITALITY ACCOUNTING 1 DEGREE (HOSPITALITY)

Lecture 7: The Petty Cash (Imprest System) Learning objectives:


After you have studied this chapter, you should be able to:
Important Textbook Reading:  Explain the usage of a petty cash book
 Chapters 18: Frank Wood & Alan Sangster “Business Accounting 1”  Make entries in a petty cash book
 Chapter 14: Andrew Leong & Wong SV “Business Accounting”  Transfer the appropriate amounts from the petty cash book to the
ledgers at the end of each period
 Understand the imprest system for petty cash

The 7 Books
Source Documents of Prime Entry The Ledgers

Petty Cash Voucher

Original Bill Petty Cash Book General Ledger

Payment Voucher for


reimbursement of
petty cash amount

Prepared by: NG KEAN WAI


BHT1333 HOSPITALITY ACCOUNTING 2 DEGREE (HOSPITALITY)

1. Introduction 3. The Imprest System:

Petty cash is small amount of money (also known as petty cash float) The cashier gives the petty cashier sufficient cash to meet his needs for a
kept in the office premise by an assigned Petty Cashier for the specific period of time (one week, two weeks or one month). At the end of
purpose of paying daily expenses that do not allow credit due to the the period, the cashier will reimburse the petty cashier the amount he paid
nature of such expenses or the amount was immaterial / not out so that the beginning of every period, the petty cashier will start with the
significant in the context of the business organisation. The amount of same amount of petty cash float.
such float given is subject to company’s established policies and the
The source documents will be various cash bills, receipts etc. Petty cashier
size of the company. It ranges from RM 50 to RM 10,000 (depending will issue the Petty Cash Voucher and signed by the recipients to
on the size of your company). acknowledge the receipts of petty cash.

Type of expenses The advantages of imprest system besides being useful control and
The type of expenses that are normally claimed through petty cash are monitoring of petty cash payments includes:
small or insignificant in nature. Some of the examples include
purchase of stationeries, taxi fares, light beverage, plastic cups, (a) The size of the float can be adjusted according to the needs of the
bottled water, decorative items for festive, printing, travelling, stamps business, depending on the frequency and amount of petty cash
and postage, donation, wages for cleaning and maintenance etc. payments.
(b) The elements of safety and accountability are maintained since the
petty cash is under the responsibility of an appointed Petty Cashier
2. Source documents
and he or she has to get regular reimbursement from Payment
section.
All business transactions must be evidenced by a source document, e.g.
items cannot change hands without an invoice being first generated to
Format
record the details of the transaction.
Petty Cash Book
Date Particular Voucher Receipt Payment Analysis
The following are the relevant source documents in the petty cash cycle: Number Dr Cr Stationary Postage Travel Sundries
Source Explanation
document
Original bills Cash receipts, taxi slips etc for transactions incurred
Illustration
Petty Cash Record payment of petty cash claims
Voucher Encik Chandra started a business on 1 May 2010. He decided to have a
petty cash system for the small amount of payment for a month. A cheque
Payment To record the payment by cash or cheque whenever amount of RM200 was issued as petty cash float. During the month, the
voucher reimbursement is requested to top up the balance. following transactions took place:

Prepared by: NG KEAN WAI


BHT1333 HOSPITALITY ACCOUNTING 3 DEGREE (HOSPITALITY)

May 2010 2 Stamps 20.00 General Ledger


4 Bus fare 11.00
5 Donation 22.00 Stationery Account
8 Pencils & erasers 14.00 May RM RM
10 Coffee 15.00 31 Petty Cash 32
13 Taxi fare 16.00
17 Telegrams 13.00
18 A4 Papers 18.00
20 Milo 17.00 Postage Account
23 LRT tickets 12.00 May RM RM
26 Parcel 19.00 31 Petty Cash 52
28 Cleaning 21.00

Petty Cash Book


Date Particular Voucher Receipt Payment Analysis Travel Account
May Number Dr Cr Stationery Postage Travel Sundries May RM RM
1 Bank 200 31 Petty Cash 39
2 Stamps 5-01 20 20
4 Bus fare 5-02 11 11
5 Donation 5-03 22 22
8 Pencil 5-04 14 14 Sundries Account
May RM RM
10 Coffee 5-05 15 15
31 Petty Cash 75
13 Taxi fare 5-06 16 16
17 Telegram 5-07 13 13
18 Papers 5-08 18 18
20 Milo 5-09 17 17
23 LRT 5-10 12 12
26 Parcel 5-11 19 19
28 Cleaning 5-12 21 21
198 32 52 39 75
31 Bal c/d 2
200 200
31 Bal b/d 2
Bank 198
200
Jun1 Bal b/d 200

Prepared by: NG KEAN WAI

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