Describe Systems Of Patty Cash Accounting.

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Describe Systems Of Patty Cash Accounting.

2 Answers

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Answer 1

You've asked a question about the system of petty cash accounting. It is the easiest system used in accounting. So I think it is easily explained. Petty cash is the cash which is used to fulfill the needs of small expenses. And these kinds of expenses usually occurred in an office on daily basis. Like usage of pencils, utility bills, daily entertainment charges etc. Hence the record of this cash is also need to be kept in office account.

For this purpose petty cash book is maintained. In that book entries are made on the date basis. And cash is recorded in the cash book on daily basis. Many columns are designed in petty cash book and they are assigned different heading, so whatever expense or income may occur that would be recorded in that particular column and row. And that thing would tell the reader on which date how many expenses has been incurred. In this way petty cash accounting is practiced.

At the end of the month the sum total of expenses and other expenditures are judged by viewing the petty cash book. It is like the necessary expenses which a business has to do on every month. I hope from this explanation you've understood the system of petty cash book and petty cash accounting is the second name of this procedure.

Answer 2

Patty cash accounting has the following systems. Open System is the system in which the petty cashier at first receives from the chief cashier a fixed sum of money for meeting petty expenses. As soon as the said amount is spent, the chief cashier again pays the required sum to the patty cashier. In fixed advanced system the petty cashier receives from the chief cashier a fixed sum of money for a fixed period of time i.e. Rs. 200 per month. The chief cashier will pay Rs. 200 to the petty cashier every month irrespective of this that whether the petty cashier has spent the total sum or not. Imprest System is generally followed by most of the business concerns. Under this system, the total petty expenses for a particular period are estimated and that amount is advanced by the chief cashier to the petty cashier. This amount is called Imprest Cash. On the expiry of the fixed period the petty cashier prepares a statement of his expenses and submits it to the chief cashier. This statement is known as statement of Petty Expenses. The chief cashier examines the statement and if he finds it correct, hands over the petty cashier an amount equal to the amount actually spent. This amount plus the amount lying unspent with the petty cashier will be equal to the Imprest Cash.