11.4 The cash book and petty cash
　　●Cash book- the cash book deals with money paid into and out of the business bank account.
　　●Bank statement – used to check the amount shown as a balance in the cash book agrees with the amount on the bank statement.
　　●Petty cash
　　- All transactions involving small amounts of petty cash are recorded in the petty cash book.
　　Petty cash book:
　　- The petty cash system is usually designed to deal with sundry small payments in cash made by a business, e.g. paying the milkman, purchasing biscuits or buying stationery.
　　- The cash receipts will be recorded together with the payments.
　　Security:
　　- Payment is only made in respect of authorized claim.
　　- All claims are supported by evidence.
　　Control over petty cash:
　　- Petty cash must be kept in a petty cash box
　　- Petty cash box must be secured in a safe place
　　- Person responsible for petty cash must be reliable and know what he/she
　　is doing.
　　- All petty cash must be supported by appropriate documentation
　　- Petty cash must be supported by the claimant and the person responsible for running the petty cash
　　- Regular spot checks must be carried out to ensure that the petty cash is accurate.
　　The imprest system – the best way to deal with petty cash.
　　Step 1 – the business decides on the amount of cash to be held as a float.
　　Dr. Petty cash　　　 X
　　Cr. Bank　　　　　　　 X
　　Step 2 – as the petty cashier makes payments; he records these in the petty cash book, which
　　Is not part of the double entry system
　　All expenditure must be evidenced by an expense receipt and the petty cashier will
　　attach an expense voucher to each expense.
　　Dr. Expense　　　 X
　　Cr. Petty cash　　　 X
　　Step 3 – With the petty cash runs low, a cheque is drawn to return the petty cash to the exact
　　amount of the original float.
　　Dr. Petty cash　 X
　　Cr. Bank 　　　　　　X
　　At any stage,
　　Float = cash in the petty cash book + sum total of expense vouchers since last reimbursement.
　　E.g. A operates an imprest system for petty cash. During February 20x7, the following petty cash transactions took place.
　　$
　　2.2.x7 Stamps　　　　　　　　　　　　　　　　 16.00
　　2.2.x7 Taxi fare　　　　　　　　　　　　　　　36.00
　　18.2.x7 Stamps　　　　　　　　　　　　　　　　 8.00
　　19.2.x7 Stationery　　　　　　　　　　　　　　 4.50
　　28.2.x7 Received from stuff for photocopying　 8.00
　　The amount remaining in petty cash at the end of the month was $93.50, What is the imprest amount?
　　A.166.00
　　B.150.00
　　C.72.50
　　D.56.50
　　Answer B :
　　$
　　Opening amount( imprest amount)　　　　 150.00
　　Add: amount received from staff　　　　　　 8.00
　　158.00
　　Less: Expenditure( 16+36+8+4.50)　　　 (64.50)
　　Cash in hand at end of month　　　　　　 93.50