Petty Cash
Definition: Small on-hand fund for minor expenses
Scope:Very NarrowDifficulty:Very Easy
Small on-hand fund for minor expenses
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Establish petty cash fund | ||
| Create $200 petty cash fund. | ||
| Petty CashAsset+ | $200 | |
| CashAsset− | $200 | |
| Cash shifts from checking to petty cash custodian. | ||
| 2. Replenish the fund | ||
| Receipts: office supplies $85, postage $45, misc $30. | ||
| Office Supplies ExpenseExpense+ | $85 | |
| Postage ExpenseExpense+ | $45 | |
| Miscellaneous ExpenseExpense+ | $30 | |
| CashAsset− | $160 | |
| Expenses recognized; fund restored to $200. Petty Cash account unchanged. | ||
| 3. Increase the fund | ||
| Increase fund from $200 to $300. | ||
| Petty CashAsset+ | $100 | |
| CashAsset− | $100 | |
| Permanent increase to the fund balance. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Petty CashPetty CashAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$200.00
$100.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$300.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$200.00
$160.00
$100.00
$460.00
Office Supplies ExpenseOffice Supplies ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$85.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$85.00
Postage ExpensePostage ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$45.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$45.00
Miscellaneous ExpenseMiscellaneous ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$30.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$30.00
DurationShort-Term
External Links
- Petty cash — Wikipedia