Petty cash fund, referred to as petty cash, is a kitty found in companies and businesses, and it’s issued for payment of small expenses such as office supplies, reimbursements, catered lunch, office flowers, newspapers, etc. In most large companies, each department has its petty cash fund. The petty cash amount varies from one company to another, but mostly it ranges from $50- $300. Each payment made from the petty cash fund is recorded in the petty cash receipt.
Periodically the petty cash fund undergoes reconciliations, and these transactions are also recorded on the financial statements. Typically petty cash is used for operations that a company considers to be unreasonable to issue a check; the company considers these transactions to be petty, thus the name.
When is it used?
Since petty cash deals with unexpected and small expenses, it is best if an employer has a petty cash receipt for every transaction made. This is because a receipt is used to keep track of how and where the money is being spent. An employer should never forget that the small transactions lead to a considerable amount of money being used and petty cash receipts are best for such calculations.
What is Petty Cash Receipt?
The petty cash fund is managed via petty cash receipts; when any money is withdrawn from the fund, a receipt must be issued to record the transaction. The petty cash receipt is also known as the petty cash voucher. The petty cash voucher features essential details about the transaction, including:
- The recipient
- The person issuing the money
- Amount issued
- How the funds will be used
- Date of issue
The receipt is used to justify any spending from the petty cash fund. These vouchers help in tracking money taken from the fund, which is also logged into the petty cash logs.
A petty cash voucher can also be used alongside petty cash request forms to replenish the petty cash fund if it’s depleted. The amount on the cash request forms should be equal to the amount of cash withdrawn from the fund.
Contents of Petty Cash Receipt
For a petty cash voucher to help track the small amounts of money being spent, an employer should confirm if all the elements mentioned below have been included in a petty cash receipt.
- How to use – Most companies include short guidelines on how to use petty cash.
- Title – This is the heading on the receipts, and it usually reads “petty cash”; this description also includes the name of the company or business using the voucher.
- The sequel no. – The sequel number has been assigned by the Custodian of the petty cash fund. This individual has been chosen to secure and protect the money in the petty cash fund and is responsible for controlling and assigning the sequel number on the petty cash voucher.
- Date – The date is also mandatory on the petty cash voucher. There are two dates mentioned on the receipt as:
- Request date: This is the date when the petty cash is requested.
- Receipt date: This refers to the date when the cash is issued.
- Pay to – For this section, the employer should see to whom the money was paid or rather the party that received the money indicated on the petty cash receipt.
- Dollar amount – the total amount of the payment made should be indicated on the receipt in dollars.
- Description – It is also necessary to include why the funds were taken out of the petty cash fund and what they were used for. The description should be brief but specific.
- Account number – the account number is a unique 10–12-digit number specific to the back account owner and is used for transactions. The employer can check this FAS 10-digit number to know where the money was sent to.
- Dept. Ref. number –it is optional to include this, but if it is included, then it is a field to be used by the department only. The department uses a department reference number to track the payment.
- Chargeable amount – this field indicates the chargeable amount related to the FAS 10-digit number recorded in Field 6
- Remaining balance – This is the amount of money that remains in the fund after the present request is deducted.
- Employee’s signatures and date when cash was received – This section indicates the employee’s information who received the cash since their signature is required. The date when the employee received the cash should also be indicated.
- Custodian’s name& signature – The person issuing/approving the petty cash request must indicate their name and append their signature on the receipt to acknowledge they approved the transaction.
Note: According to the Internal Revenue Service (IRS), petty cash slips should be filled and attached to the receipts for documentation of expenses.
Here are some additional tips for the employer to observe when dealing with petty cash.
Managing receipts is an essential part of managing petty cash funds. Even with the petty cash receipts to track how the petty cash funds are being spent, an employer should have a custodian who will manage the receipts. With a proper recording of receipts, the employer can review them occasionally to ensure that the petty cash fund is being spent for the right reasons.
Getting right signatures
The employer should ensure that the receipts get the correct signatures to ensure a proper paper trail. That means that the Custodian must sign to authorize the petty cash funds, and the employee receiving the cash should also sign the receipt to show what the funds were used for.
The petty cash receipt helps with accounting issues. This makes it easier for the employer to file taxes and check for discrepancies or embezzlement of funds. In addition, with records, the employer can track the amount of money remaining in the petty cash fund and the amount that has been used.
A petty cash receipt is an important part when distributing the petty cash funds as it helps an employer track how and where the money is being spent. That means that an employer should have a custodian who protects the petty cash funds and authorizes the release of these funds. The employee receiving the funds should also sign the receipt. There are components listed above that an employer should confirm and make sure that they are all present in the petty cash receipt.