Angie In: Category - Accounting Others The balance of petty cash book is an asset or income? assetincomepetty cash book Share Facebook 1 Answer Voted Recent Dheeraj 2020-08-25T20:41:42+05:30Added an answer on August 25, 2020 at 8:41 pm This answer was edited. Balance of Petty Cash Book- The balance of petty cash book is an asset and not income. The logic behind the answer is that petty cash book is one of the types of cash book and petty cash book records expenses and incomes which is similar to cash book. Since cash account is considered as an Asset, petty cash book which is a part of cash book is also an asset. The balance of petty cash book is never closed and their balances are carried forward to the next accounting period which is considered as one of the most significant qualities of an asset whereas Income doesn’t have any opening balance and their balances get closed at the end of every accounting year. Petty cash book is placed under the head current asset in the balance sheet. The Closing Balance of petty cash book is computed by deducting Total expenditure from Total cash receipt (as received from the head cashier). To make the above explanation and logic easy. I would like to add a practical example for clear understanding. Example Problem Prepare Petty Cash Book of Alex & Max Co. from the following information as provided below Date Particulars Amount 1st Aug Received cash from head cashier 5,000 4th Aug Paid Cartage expenses 300 8th Aug Telephone charges paid 200 10th Aug Paid Sundry expenses 500 Petty Cash Book of Alex & Max Co. Conclusion I would like to conclude my answer by stating that the balance of petty cash book is an asset and not income. 0 Reply Share Share Share on Facebook Share on Twitter Share on LinkedIn Share on WhatsApp Leave an answerCancel replyYou must login to add an answer. Username or email* Password* Captcha* Click on image to update the captcha. Remember Me! Forgot Password?