6 Advantages of Petty Cash Book

Petty Cash Book is a book that records a large number of small payments such as conveyance, cartage, postage, telegram, and other expenses. These expenses occur very frequently in an organization and it becomes very difficult for the main cashier to accommodate them in the main Cash Book. This is due to the fact that the main cash book will become very bulky and the main cashier will be overburdened because of petty cash transactions. Thus a petty cashier is appointed who is authorized to make payments of petty cash expenses and record them in Petty Cash Book. Advantages of Petty Cash Book are discussed below

Advantages of Petty Cash Book

Saving of Chief Cashier’s Time: In case, the petty expenses are recorded in the petty cash book then the time of the chief cashier is saved.

Reduction in Mistakes: As the chief cashier regularly examines the cash book the chances of mistakes are reduced to a minimum.

Low Probability of Fraud: Defalcation of cash can be minimized since the petty cashier is not allowed to draw cash as and when he desires.

Specialisation in Work: The chief accountant can obtain the benefits of specialization as the transactions are recorded in two separate books. The main cash book and the Petty cash book.

Reduction in Petty Expenses: Petty cash expenses are to be kept within the limits of imprest as the petty cashier can never spend an amount that is more than available petty cash.

Labour Cost in Posting of Transactions is saved manifold: This saving takes place because of below mentioned two reasons:

  • The number of accounts opened under the head petty expenses is limited.
  • Periodically the balances of various accounts are to be transferred to their respective heads.


Difference between Journal and Ledger

In Journal, Recording all the transactions at one place in chronological order. In Ledger, After recording, all the transactions are posted to their respective accounts.

Ledger in Accounting?

Ledger is the next stage after Journal. After recording all the entries in the Journal, the next step is the posting of the transaction in the respective accounts. These accounts are collectively known as Ledgers.

What is Account?

An account is a summarised form of all the transactions relating to a particular head at one place in chronological order. An account not only records the amount of the transaction but also its effect and direction.

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