Petty cash
In one sentenceA small amount of cash handed to a responsible employee (a cash custody) to pay simple daily expenses, then replenished by the amount spent against documents.
Simply put
In the imprest system you set a fixed amount for the fund. The employee pays from it and keeps the invoices, then you give back exactly what was spent, so it returns to its original amount.
Count the fund by surprise from time to time: the cash on hand plus the invoices must always equal the custody amount.
Worked example
A contracting business has a petty cash custody of 5,000 SAR. At the end of the month the person responsible handed in invoices of 3,800 SAR and had 1,200 SAR in cash.
Custody amount5,000
Spent per invoices3,800
Remaining cash = 5,000 − 3,8001,200
Dr Miscellaneous expenses3,800
Cr Bank3,800
Replenishment amount (brings the fund back to 5,000)3,800 SAR
Don't confuse it with
CashCash covers all of the business's cash, and petty cash is a small part of it for specific expenses.
in FullScreen ERP
Receipt and payment vouchers in the system, in cash or by bank transfer, linked to the accounts. General accounts