What is Petty cash fund?
What is Petty cash fund accounting
Meaning of petty cash fund/What is Petty cash fund accounting
The new accounting system of his majesty government has given emphasis on banking transactions. All the receipts and payments of government officer are made through bank however, practically, it may not be convenient to issue cheque for making small expenditure like Rs. 10 for po
stage stamps, Rs, 20 coolie charge, Rs.30 for coke, Rs, 40 bus far etc. such expenditures are called petty expenses. It is not possible to issue a cheque for these kinds of expenditure. Hence, to overcome this particular difficulty, the new accounting system has a provision to create a separate fund to meet the day to day petty expenses. A fund is created by providing the required cash to an employee of the office, who is called petty cashier. Thus, all the petty (small) expenses are paid through this fund and recorded in petty cash book in a format is designed by AGF no. 22.
New accounting systems of NG, Nepal has made a provision of creating petty cash fund of Rs. 200 to Rs. 500 as per the requirement of a office. This fund is established under impress system and the petty expenses are reimbursed periodically. The petty cashier is given an amount equal to amount made out of petty cash fund at the end of each period i.e. week, month etc. the petty cash fund will have the same amount equal to the original amount of previous period.
Note to be considered in respect of petty cash fund
• Petty cash fund must be maintained in the format of AGF No. 22.
• Petty expenses are paid only out of petty cash fund.
• Petty cash payment voucher must be used for every petty payment.
• It may be created with an amount ranging Rs.200 to Rs.500 as per requirement of the government office.
• The expenses of petty cash fund are not posted to bank book.
• Advance payment cannot be made from it.
• At the end of a certain period the petty cash fund is reimbursed with the amount equal to the total petty expenses made during the period.
Importance of petty fund/ What is Petty cash fund accounting
Petty cash fund is which is created in NG's office to pay petty (small) expenses. The importance of it can be summarized as follows:
• The payment of small expenses from bank cash book.
• To separate petty payments from bank cash book.
• To reduce the use of cheque for small expenses.
• To minimize cost and time of issuing cheque for petty payment.
• To facilitate the burden of chief accountant because a large number of petty expenses are recorded by petty cashier.
Forms used for operating petty cash fund
The following types of forms are used for operating petty cash fund.
• Cash payment slip (A.G.F. No.6)
• Cash payment slip and cash control form (AGF. No.7)
• Petty cash book or petty cash fund account (AFG No.22)
• Requisition form for the reimbursement of cash payment (AGF No.6A)
Cash payments slip (AGF No.6)
Cash payment slip is a primary book used in the management of petty cash fund. It is prepared to make systematic record of the payment of cash out of petty cash fund. This slip is designed under the auditor general's office (A.G.F. No. 6). It includes the amount paid. The name of the receiver and other necessary details about the payment. A general specimen of a cash slip is given below:
Cash payment slips and cash control form (AGF. No. 7)
Cash payment slip and cash control form is used to check the misuse of cash payment slip used for making payment from petty cash fund. The leaf of cash payment slip is pre-numbered and it is used to petty cashier, who is responsible to handle the petty cash fund. The beginning or ending number of cash payment slip is recorded in this form. This form is maintained in a format as designed by AGF No. 7.
Petty cash book and petty cash fund account (AGF. No. 22)
Petty cash book is a main subsidiary book. This is maintained by petty ashier to record the petty expenses of government operating level officer in it on different heads. This fund is maintained in a format as designed by AGF No.22. it has major seven column. The amount received from main cashier is recorded on the debt column and the petty expenses are recorded on the credit slide chronologically.
Requisition form for the reimbursement of cash payment (AGF No. 6 (a))
According to the principle of implores system of petty cash fund. The payment of petty expenses, which are made out of petty fund should be reimbursed, under this, the petty cashier should prepared a form, which is known as requisition form the reimbursement of cash payment. The form is designed by AGF No. 6 (A) and submitted to the head cashier/accountant for reimbursement of petty cash fund. The specimen of this form is given below.
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Note to be considered in respect of petty cash fund
• Petty cash fund must be maintained in the format of AGF No. 22.
• Petty expenses are paid only out of petty cash fund.
• Petty cash payment voucher must be used for every petty payment.
• It may be created with an amount ranging Rs.200 to Rs.500 as per requirement of the government office.
• The expenses of petty cash fund are not posted to bank book.
• Advance payment cannot be made from it.
• At the end of a certain period the petty cash fund is reimbursed with the amount equal to the total petty expenses made during the period.
Importance of petty fund/ What is Petty cash fund accounting
Petty cash fund is which is created in NG's office to pay petty (small) expenses. The importance of it can be summarized as follows:
• The payment of small expenses from bank cash book.
• To separate petty payments from bank cash book.
• To reduce the use of cheque for small expenses.
• To minimize cost and time of issuing cheque for petty payment.
• To facilitate the burden of chief accountant because a large number of petty expenses are recorded by petty cashier.
Forms used for operating petty cash fund
The following types of forms are used for operating petty cash fund.
• Cash payment slip (A.G.F. No.6)
• Cash payment slip and cash control form (AGF. No.7)
• Petty cash book or petty cash fund account (AFG No.22)
• Requisition form for the reimbursement of cash payment (AGF No.6A)
Cash payments slip (AGF No.6)
Cash payment slip is a primary book used in the management of petty cash fund. It is prepared to make systematic record of the payment of cash out of petty cash fund. This slip is designed under the auditor general's office (A.G.F. No. 6). It includes the amount paid. The name of the receiver and other necessary details about the payment. A general specimen of a cash slip is given below:
Cash payment slips and cash control form (AGF. No. 7)
Cash payment slip and cash control form is used to check the misuse of cash payment slip used for making payment from petty cash fund. The leaf of cash payment slip is pre-numbered and it is used to petty cashier, who is responsible to handle the petty cash fund. The beginning or ending number of cash payment slip is recorded in this form. This form is maintained in a format as designed by AGF No. 7.
Petty cash book and petty cash fund account (AGF. No. 22)
Petty cash book is a main subsidiary book. This is maintained by petty ashier to record the petty expenses of government operating level officer in it on different heads. This fund is maintained in a format as designed by AGF No.22. it has major seven column. The amount received from main cashier is recorded on the debt column and the petty expenses are recorded on the credit slide chronologically.
Requisition form for the reimbursement of cash payment (AGF No. 6 (a))
According to the principle of implores system of petty cash fund. The payment of petty expenses, which are made out of petty fund should be reimbursed, under this, the petty cashier should prepared a form, which is known as requisition form the reimbursement of cash payment. The form is designed by AGF No. 6 (A) and submitted to the head cashier/accountant for reimbursement of petty cash fund. The specimen of this form is given below.
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Small or large companies maintains two types of Petty Cash Book for all cash transactions of a business. It depends on nature, volume and necessity of transactions of a business organization. Cash transactions might be of cash or cheque.
ReplyDeleteVery informative blog Petty Cash Management software
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