A Glimpse Of What Should Be Happening
In every success story, you will find someone who has made a courageous decision. -- Peter F. Drucker
Petty cash funds can be benefit to business of all sizes. The ideal strategy would be to establish clear business goals for those responsible to ensure the account maintains the designated balance, who will have access to the funds and which expenses are deemed as applicable.
The key accounting tips to understand is that the only time Petty Cash is debited is when fund is initially established, as shown below , or when the fund is being increased.
July 1 Petty Cash $500
In addition, the only time Petty Cash is credited is when the fund is being decreased for use of expenses. The most common expenses may be postage, office supplies or minor repairs. It's appropriate to give two persons within the company access to the petty cash account. One person should have access to replenishing the funds as outlined in the business procedures along with the responsible journal entries.
Accounting Scenario example:
The amount of cash in the petty cash fund is $120. Issued a check to replenish the fund, based on the following summary of petty cash receipts: office supplies, $300, and miscellaneous administrative expense, $75. Any missing funds should be recorded in the cash short and over account.
Office Supplies 300
Miscellaneous Administrative Expense 75
Cash Short and Over 5
Whether your small business is a one-person, home based business or a large corporation, Fontenot & Associates Solutions LLC can support with establishing the essential detailed policies and procedures for the accounting and operations team.
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