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?
This cash is called Petty cash
What entry should be passed by you
Cash Dr/Petty Cash Dr
To SBI bank
it is a Contra entry in Tally
Where should you keep this cash?
In your pocket or somewhere else?
This cash should be kept at a secure locker kept at Accounts Department
It should never be kept in pocket or taken home
Suppose a Peon Ravi ask for Rs 1000 for purchasing tea and biscuits
What will you do
We will get his as well as his Admin manager's sign on Cash Voucher (IOU -I Owe You Form)
No entry to be passed in Tally
Suppose peon Ravi spends 800 and return 200
What entry is to be passed
Office Maintainance Dr 800
To Cash 800
(No entry required of 200)
What if Ravi does not submit bill within time allowed as per Company's policy?
In this case,Entry is to be passed
Ravi a/c Dr
To Cash a/c
This amount is recovered from his next salary
How is Cash Reconciliation Prepared in this case of Cash Verification
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.