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Petty Cash Book

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A government office requires to pay different types of petty expenses daily. It is impractical and inconvenient for paying such petty expenses, like bus fair, cartage, and postage stamp through cheque. To pay such petty expenses directly in cash, every government office creates petty cash fund. All petty expenses are paid through this fund and their records are made in a separate book, which is known as petty cash book. Hence, the petty cash book is one in which all small items of expenses are recorded in a systematic manner made through petty cash fund. Petty cash book is a book, which is maintained by a petty cashier to make a record of petty expenses made through petty cash fund. The form is designed under the AGF No. 22.

Importance and Advantages

The followings are the advantages and importance of petty cash book:

  • It makes a record of all petty payments systematically.
  • It supplies information regarding petty payments made on different heads more easily and quickly.
  • It makes a comparison of the petty expenses between two periods and helps in controlling such petty expenses more effectively.
  • It reduces the burden of the main cashier as he is not required to handle petty transactions.
  • It helps in making the bank cash book more informative, clean and clear.
  • It helps in making the records of cash transactions up-to-date because of a division of labour in recording cash transactions.

Types of Petty Cash Book

The following are the types of petty cash book:

Simple petty cash book
A simple petty cash book is one which there is only one amount column on its both sides with common date and particular columns. The debit column is used for entering the balance of cash in hand of the petty cashier at the beginning of the period and the amount received from the head cashier. The credit amount is used for entering the petty payments in order of date. It is balanced like a ledger account.

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Analytical petty cash book
An analytical petty cash book is one which there is one amount column on its debit side and a number of amount columns on its credit side for different heads of expenses. Since the petty cash book analyses, the expenses into a number of heads of expenses, the name given to it is analytical petty cash book. Each payment is recorded on it twice; one on total amount column and next on individual expense column.

An analytical petty cash book is more advantageous to maintain than simple petty cash book because of the following reasons:

  • It makes records of all petty expenses separately.
  • It supplies detailed information of any head of expense easily and quickly.
  • It makes possible for comparison of different heads of expenses between two different periods and thus helps in making effective control on them.
  • It provides the facility of cross checking as the sum total of total amount column should tally with the total of all individual expenses columns.
  • It is a more useful type of petty cash book particularly to a large scale business performing a large number of petty transactions separately.



  • All petty expenses are paid through petty cash fund and their records are made in a separate book, which is known as petty cash book.
  • The petty cash book is one in which all small items of expenses are recorded in a systematic manner made through petty cash fund.
  • Petty cash book is a book, which is maintained by a petty cashier to make a record of petty expenses made through petty cash fund.
  • The form of petty cash book is designed under the AGF No. 22.
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Very Short Questions

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  • A government office requires to pay different types of petty expenses ______.

    daily
    weekly
    monthly
    yearly
  • ______ is one in which all small items of expenses are recorded in a systematic manner made through petty cash fund.

    Petty cash book
    Bank reconciliation statement
    Cash flow statement
    Bank cash book
  • Which one of them is not the importance of petty cash book?

    It supplies information regarding petty payments made on different heads more easily and quickly.
    It makes a record of all petty payments systematically.
    It increases the burden of the main cashier as he is not required to handle petty transactions.
    It helps in making the bank cash book more informative, clean and clear.
  • Petty cash book is designed under the ______.

    AGF No. 9
    AGF No. 19
    AGF No. 5
    AGF No. 22
  • ______ is a book, which is maintained by a petty cashier to make a record of petty expenses made through petty cash fund.

    Funds flow book
    Budget sheet
    Petty cash book
    Bank cash book
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