If you are not the one who is from a commerce background, you might be thinking what is petty cash? What’s its purpose? Why do I need it when I already have cash? If you are thinking about these questions then here are your answers. Petty cash is an accessible store of money kept by an organization or business for small expenditures. The purpose of petty cash is to allow the sales and purchase of minor things that require only some bucks. These expenses are mostly unanticipated. It’s much more feasible and cost-effective to maintain an account for such small transactions then recording them separately. In this article, we will know all about petty cash in Quickbooks.
Petty cash in QuickBooks: It is the way where you can track your petty cash amounts by making a petty cash account. You can set up your account, transact, record, petty expenses, and accounting. It is in the form of cash used for expenditures. This software is one of the best cash daybooks used in keeping the book.
Benefits of petty cash in Quickbooks
You can make your tiny transactions without thinking much. Such as you can buy stamps, food, snacks for customers, and record it there. Quickbooks accounting software allows you to maintain and use the petty cash account in your software very smoothly. You get some more advantages which can be convenient for you, have a look-
Minimal risk and secured: By maintaining the petty cash account risk of keeping cash in your hand is reduced and it is a very secured locked box so it is completely safe.
Convenient to use: It is to use as it provides us a convenient supply of cash whenever we need to make small transactions.
Specified manner: Petty cash account records all the transactions in a specified manner. Which provides more clarity and keeps all your spendings in manner.
Reduced paperwork: In Quickbooks, you can keep long term transactions so there is no need to do a lot of paperwork now Quickbooks will do that all for you.
Set up and use petty cash in QuickBooks?
A very easy way to set up and use petty cash online. So here are the steps to create a petty cash account when you move cash from your bank account into petty cash. The procedure is quite similar to how you create a new account in Quickbooks but if you don’t know
Here are the steps:-
- Reach out to the settings and select a chart of accounts.
- Select New.
- From the account, type drop-down ⇓, and click Bank.
- From the detail type drop-down ⇓, select Cash On Hand.
- In this step enter the petty cash for the account name.
- When you move money from the checking account by writing a check or transferring funds the opening balance will be created.
- Select Save and Close.
Started to manage petty cash
As you had created your account, now this time to put some money into your account. Also, keep updated about your petty cash.
As you know, where you have to put your cash in
- Take some cash from your checking account and put it in a locked cash box.
- Maintain a record of the transactions in QuickBooks Online.
- If I had written a check for cash: choose to create new⊕ and then check. Then choose petty cash as the payee. And then choose to ➕ add new. If petty cash is not there in the payees’ list.
- If you didn’t withdraw your cash without writing a check: choose to create new⦽ and then transfer.
Take cash out
- When you give cash to the employee we make a record with a paper of slip. Which contains to whom, which, where, and for what the money was used. This is like a receipt that is used to track the cash that you had.
- For all the times, the amount on a slip of paper and the cash you have left should add up to the amount you deposit in the box.
Uses of petty cash
It is helpful for providing funds to the business units with sufficient cash to cover minor expenditures.
How we can do cash accounting and recording in petty cash
Accounting:- This accounting involves establishing petty cash policies, setting up a cash log, and creating journal entries. Accounting can be done manually with bookkeeping software and an expense card.
Recording:- Record is the major component of the petty cash as it keeps all the records of withdrawal of the money and put into the cash box. it is bookkeeping of every transaction.
Step 1: Policies and procedures
- It is to assign a person to be in charge of petty cash. It knows petty cash custodian.
- There should be someone to whom you can trust to adhere to the petty cash procedures.
- This is to inform all the employees that receipt is mandatory for all the petty cash purchases.
- A scanner will help you to scan your receipt that help you to be safe in future use. In case you lost the receipt.
- The cash account should be monthly basis friendly relation or each time to restore.
- The cash purchase records on a monthly basis in the books to maintain a record.
Step 2: Set up a petty cash log?
This cash log detailed all the deposits and withdrawals made from the petty cash account. It includes all the information and also a brief description. Such as what purchase, to which account is to change, who receives the funds, and who grants it. So, you should keep all your monthly information.
Step 3: Record a general record of petty cash
At least once in a month cash transactions should record. As well as you can use accounting software like QuickBooks accounting software and also a spreadsheet to keep track of your income and expenses.
These purchases recorded an increase (as a debit) to an expense account and decrease (as a credit)to a cash account.
Step 4: Restore the relationship between the cash account
Generally, it keeps all the information of the cash account it keeps all the journal entries for future use.
We hope this will help you to understand petty cash and how you can use petty cash in QuickBooks. If you have any issues related to the information provided above you can contact us. We have a team of ProAdvisors and Experts with great experience to assist you 24*7. So, get in touch with us whenever required by ringing us on our toll-free customer support number +1-844-519-0042 to get instant help. You can also contact us if you have any other queries or issues related to Quickbooks.
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