How to Maintain a Petty Cash Fund
Every business has those little, unpredictable expenses that seem to arise at inconvenient times. To handle these with the least amount of bookkeeping, check-writing and trouble, we advise a petty cash fund and the following procedures.
- Determine the amount of petty cash required.
- Write a check to "Cash" to establish the petty cash fund.
- Store the cash in a locked box under the control of a trusted employee.
- As cash is required, the petty cash fund is used. After each purchase, the receipt for the item and any change are returned to the box.
- As the cash in the fund is depleted, gather all the receipts and total them. Write a check to "Cash" to replenish the fund for the total of the receipts. This will return the Petty Cash to its original amount. The check-stub should record the type of expenses being reimbursed by category and amount; i.e., office $25.38, auto $10.00, repairs $25.00. The total of the check issued to replenish the petty cash fund is $60.38.
At any given time the total of receipts and the cash in the box will total the full amount of the petty cash fund.