Suppose Company ask you to withdraw  5000 Cash from SBI Bank and keep with you for day to day expenses of office

What is this cash called?

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This cash is called Petty cash

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What entry should be passed by you

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Cash Dr/Petty Cash Dr

          To SBI bank

it is a Contra entry in Tally

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Where should you keep this cash?

In your pocket or somewhere else?

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This cash should be kept at a secure locker kept at Accounts Department

It should never be kept in pocket or taken home

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Suppose a Peon Ravi ask for Rs 1000 for purchasing tea and biscuits

What will you do

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We will get his as well as his Admin  manager's sign on Cash Voucher (IOU -I Owe You Form)

 

Petty Cash Procedure in Companies for Cashiers - Cash Handling and Reconcilation Process

 

No entry to be passed in Tally

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Suppose peon Ravi spends 800 and return 200

What entry is to be passed

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Office Maintainance Dr   800

             To Cash  800

(No entry required of 200)

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What if Ravi does not submit bill within time allowed as per Company's policy?

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In this case,Entry is to be passed

 Ravi a/c     Dr

      To    Cash a/c

 This amount is recovered from his next salary

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How is Cash Reconciliation Prepared in this case of Cash Verification

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When a cashier gives advance to an employee, he gets “I owe you” form signed by the employee. The employee has to submit bills, or return back the money within a certain period. If he fails to do so, the amount is debited in his account by passing the entry as:

     Employee a/c     Dr

To    Cash a/c

Hence balance of cash a/c as per Tally may not match, with actual cash. Hence reconciliation is prepared in the following format:

 

Balance of cash a/c as per Tally           ____________________________

 Less: I owe you forms                          ____________________________

 Actual cash balance                             ____________________________

If actual cash balance does not match, then cash has not been handled properly.

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  1. Accounts and Finance
  2. AP and AR Process

About the Author

Davneet Singh's photo - Teacher, Engineer, Marketer
Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 10 years. He provides courses for Maths and Science at Teachoo.