WEEK 2: PETTY CASHBOOK

                                                   WEEK 2

 JSS2                            BUSINES STUDIES

TOPIC:                          PETTY CASHBOOK

Specific Objectives: By the end of the lesson, the students should be able to:

1.     Define petty cashbook

2.     List the items of expenses in petty cashbook

3.     Show the format of petty cashbook

4.     State the advantages of keeping a petty cashbook

5.     Explain what you understand by imprest system.

Meaning of Petty Cashbook:

Petty cashbook is a book of account where minor expenses that cannot be conveniently entered into the cashbook are recorded. Firms usually employ a junior staff proved to be faithful and of high integrity to do this work. The person who keeps the petty cashbook is called the Petty Cashier.

The type of expenses usually recorded in petty cashbook include; stationery, office tea, postage stamps, cleaners wage.

The amount set aside for running these minor expenses is known as Float

Imprest System:

Imprest system is the most popular way of keeping the petty book. By this system a specific amount known as float is left with petty cashier for petty expenses. At the end of the period, say a month, an amount equal to the amount he has spent is given back to the cashier to restore his cash at hand to the original amount held. For example, the amount held by the cashier 1000 out of which he spent 700 during the period it means that 700 would be given back to him so as to restore the cash he has at hand to the original amount.

Advantages of Petty Cashbook:

1.     It makes for effective record keeping of petty expenses which could have otherwise been forgotten

2.     Keeping of petty cashbook prevents clustering of cashbook with minor expenses.

3.     It helps the senior accounts officer or chief cashier to concentrate on more important work by leaving the keeping of the petty cashier to restore the float.

4.     It gives clue to the extent the company spends on each of the items such as transport, carriage.

5.     The imprest system check extravagant spending by the company. This is done by keeping a watch on the amount given to the petty cashier to restore the float.

Ruling of the Petty Cashbook:

Evaluation Questions: 

1.     Define petty cashbook

2.     Explain what you understand by imprest system

3.     Show the format of petty cash book

Assignment:

State at least three disadvantages of keeping petty cashbook