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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)
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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