Question

What is petty cash book? Write the advantages of petty cash book.

Answer 1

Petty cash book is used for recording payments of small expenses, which are of smaller denominations such as postage, stationery, conveyance, refreshment, etc. Person who maintains Petty cash book is known as petty cashier and these small expenses are termed as petty expenses.

Advantages of Petty cash book:

1. Simple method: Recording of transactions in a petty cash book is easy. In an analytical petty cash book, there exists separate heads for different petty expenses, which makes recording much easier. Recording in a petty cash book does not require formal knowledge of accounting principles and techniques.

2. Time saving: Recording in petty cash book dsaves time and efforts of teh chief cashier.

3. Efficient control: At teh end of a period, Petty cash book is audited by the main cashier, so frauds and errors are less probable.

4. Convenient handling: Recording in petty cash book is convenient, as entries are to be recorded under separate heads, which makes posting easier and quicker.