Step-by-step guide
How to prepare a petty cash book
A petty cash book records small cash payments under the imprest system, sorted into columns. The float is topped back up to a fixed amount each period.
Step by step
- Start with the imprest amount. Enter the opening float. This is the fixed sum the petty cashier holds, and it is restored each period.
- Record each payment with a voucher. Enter every small payment on the credit side, supported by a numbered petty cash voucher.
- Analyse into columns. Extend each payment into an analysis column, such as postage, travel or stationery.
- Total the columns. At the end of the period, total each analysis column so the amounts can be posted to the ledger.
- Restore the imprest. The chief cashier gives the exact total spent, bringing the float back to the imprest amount.
Worked example
With a RM200 imprest and RM150 spent, the cashier is given RM150 to restore the float to RM200.
Understanding the method
Under the imprest system, the petty cashier holds a fixed amount. At any time, the cash in the tin plus the vouchers for money spent must add up to that amount. So a shortfall shows up quickly.
The opening float is a debit, because the cashier holds cash for the business. Every payment is a credit, because cash is leaving.
The analysis columns save time. Posting forty small payments one by one would clutter the ledger. Instead, each payment is also entered in a column such as postage, travel, cleaning or stationery.
At the end of the period, only the column totals are posted. Think of each column as an expense account waiting to be totalled. To choose the column, ask what the money was for.
Questions may not follow the order of the steps. The imprest might be mentioned late. Open with the float anyway.
If the question gives the amount restored and asks for total spending, read the system backwards: reimbursement = imprest − cash left = total payments. A top-up of cash during the period goes on the debit side. It does not change the imprest.
Here is an example. The imprest is RM250.
During the month the cashier pays RM32 for stamps, RM48 for a staff taxi and RM27 for envelopes and paper. The cashier also pays RM55 for office cleaning and RM19 for tea and coffee. Each has a numbered voucher.
Total payments are 32 + 48 + 27 + 55 + 19 = RM181. The columns hold postage RM32, travel RM48, stationery RM27, cleaning RM55 and sundries RM19, which also add up to RM181.
Cash left is 250 − 181 = RM69. The chief cashier reimburses exactly RM181, and RM250 is brought down for the new period.
Two checks help. The analysis column totals must equal the total payments column. And the cash left plus the reimbursement must equal the imprest.
If either fails, a payment was mis-entered or left out. Only then post each column total as a debit to its expense account.
Common mistakes include reimbursing a rounded figure such as RM180 or RM200 instead of the exact total. Another is posting the whole total to one expense account, which defeats the purpose of the columns. Another is treating a mid-period top-up as a payment.
If petty cash questions go wrong at the reimbursement or the column totals, we can help. One of our teachers can write up a petty cash book with you and check every figure. Book a trial class
Related skills
The methods here are standard accounting practice, with original figures. For your exam board's exact requirements, see exam boards and Sources.
Practise this skill with a teacher
A teacher can watch you attempt the method and correct it as you go. One-to-one and online, from RM75/hr.
One-hour paid trial · Same-day reply