Cash Float And How They Are Shown In Simple Accounts.

[davidk65]

To save issuing cheques for small amounts an individual has been given a cash float. The staff come to this person, with receipts, and they are reimbursed from the float. Later the receipts are all handed in and a cheque for the total amount is drawn to replenish the cash float. The accounts now show a float f £100 has been issued. £50 of that has been used to pay for car repairs. A further £50 is used to pay a builder for building repairs. The car and building repairs will need to be recorded under the appropriate expenditure categories; total £100.00. But what about the cheque? If all are treated as expenditure how do you prevent it showing that £200 has been spent instead of £100.00?

[Tuvok]

Its year since I did basic accounts.

If you keep the petty cash account separate and the do a transfer to petty cash, would that work?

[Tuvok]

accounting-simplified.com/petty-cash.html

[tamborine]

Youve used the £100 float to pay for car & builder; list as expense. You draw another £100chq to replenish float, list as expense. Accounts will show where the £200 went under relevant listings.

Car & builder would have been better paid by cheque.

[beso]

I don't know where you learnt accounting Tam.

The cheque is NOT an expense.

The ledger entry for the cheque will be from the Bank Account to the Petty Cash.

[davidk65]

Hi Beso and Others. In spite of what has been said, I am still struggling with the Petty Cash! I follow that the key is to have a petty cash account in to which is entered an amount drawn from the bank account and at this point such an amount is "not an Expense". I assume that the "expense" bit comes when I pay the builder and the garage and when I enter such in expenditure of the accounts. But this is were I lose the plot. The bank account will show a debit of a £100 for the petty cash account. The Expenditure account will also show expenditure of £100 also but how are the two related because it looks as if I have spent £200. HELP

[beso]

All the cheque does is move the money from the bank account to the petty cash account. You have not spent it.

The two transactions are not related in the ledger in any way.