The cash book as seen above is used for
recording all major payments. But, in every business a number of petty (small)
Payment like that for postage, carriage, stationery, entertainment, cartage,
conveyance etc. are paid frequently even in a single day. If all these petty expenses
are to be recorded in the main cash book. It would be come too bulky and
difficult to handle therefore, it is usual for the business units to maintain a
separate cash book to record small payments only. Such a cash book is known as
petty cash book. Petty cash book can be of two types.
a) Simple
petty cash book and
b) Analytical
petty cash book.
1.) SIMPLE PETTY CASH BOOK:- A simple petty cash book is written just
like the cash book.
The amount received by the petty cashier from the head cashier is recorded on
the debit side of the petty cash book and payment on the credit side of the
petty cash book. Expenses account is individually debited in the ledger.
2.) AN ANALYTICAL PETTY CASH BOOK:- An Analytical petty cash book is employed by a large concern having a number of
transactions of petty amount such petty. Cash book contains individual columns
for each expense every small payment is recorded on the credit side. One of the
total payment column and second in one of the analytical amount columns. The periodic
total of expenses column is posted to the expenses accounts concerned while the
total of expenses column is posted to the expenses accounts. Concerned while
the total of payment column serves to find out the balance of cash with the
petty cashier.