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. Types of Petty Cash Book are discussed below
Types of Petty Cash Book
There are two types of Petty Cash Books :
- Simple Petty Cash Book
- Analytical Petty Cash Book or Columnar Cash Book
Simple Petty Cash Book
Simple Petty Cash Book is identical to a Cash Book. Any cash which a petty cashier receives is recorded on the left-hand side cash column (debit or receipts side) and any cash which he pays out is recorded on the right-hand side (credit or payments side).
Analytical Petty Cash Book or Columnar Cash Book
An Analytical Petty Cash Book has two sides, the left-hand side is used for recording receipts of cash (this will be from the main cashier), and the right-hand side, which is used for recording payments. In the Analytical Petty Cash Book, a separate column is provided for recording a particular item of expenditure i.e. postage, stationery, traveling, advertisement, etc. A column is also provided for sundries or miscellaneous expenses.
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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.