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Home/Questions/Q 60591
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Nabia Saher
Nabia Saher
In: Category - Accounting Others

What is the type of account and normal balance of petty cash book?

petty cash booktype of account
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    1. Dheeraj
      2020-08-05T19:37:37+05:30Added an answer on August 5, 2020 at 7:37 pm
      This answer was edited.

      Petty Cash Book

      Type of Account

      “Petty cash” is an asset and is shown under the category of current assets in the balance sheet. Since it is an asset, the normal balance of petty cash will show a positive balance (or) debit balance. According to the modern rules whenever there is an increase in the value of the asset then the particular asset account is being debited and vice-versa.

      Modern Accounting Approach-

      Received 250 from the head cashier for all petty cash expenses. Journalise the following transaction.

      Accounts InvolvedL.F.AmountNature of AccountAccounting Rule
      Petty cash a/c250AssetDebit– The Increase in Asset
       Cash a/c 250AssetCredit– The Decrease in Asset

      The amount of petty-cash will increase when it is debited with additional cash and will decrease when expenses incurred. Petty-cash book follows the imprest system of accounting. The normal opening balance of cash will be placed on the Left Hand Side under cash receipts column. Total payments are shown on the Right Hand Side of the petty cash book.

      Example-

      Prepare a Petty Cash Book on the imprest system from the following data as provided below-

      DateParticularsAmount
      Jan        1Received cash from head cashier450
                    2Paid cartage20
                    3Paid for carriage50
                    4Paid for bus fare50
                    5Cartage charges40
                    6Refreshments to customers40

      Petty Cash Book

      Petty Cash Book

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