Petty Cash Processing Guide

Managing petty cash efficiently is essential for tracking small expenses and ensuring accurate financial records. This guide outlines the steps for setting up and processing petty cash transactions, reconciling the account, and ensuring it aligns with the physical cash balance.

Steps to Process Petty Cash

1. Set Up a Petty Cash Account

1. Create a Purchase Ledger Account in your system.
2. Name the account "Petty Cash" to easily identify it.

2. Post Transactions to the Petty Cash Account

• As Money is Spent or Receipts are Returned:

  • Post these transactions directly to the Petty Cash account.
  • Code each transaction to the appropriate nominal ledger account for accurate categorisation.

• If Transactions Were Posted to a Different Account (e.g., Supplier Account):

  • Transfer these to the Petty Cash GANI (General Account Nominal Index).

3. How to Transfer Transactions to the Petty Cash GANI

1. Open the Supplier Account where the transactions were originally posted.
2. Go to the GANI Tab.
3. Highlight the transaction line you want to move.
4. On the right-hand side, click the Transfer button.
5. Enter the Petty Cash Account Number and complete the transfer.

4. End-of-Month Reconciliation

1. Post a Credit Invoice:

   • At the end of the month, reconcile the physical cash (tin) with the account balance.
   • Post a Credit Invoicefor the total petty cash value:
     • Use No VAT.
     • Enter the Nominal Date and Tax Point Datefor the last day of the month.
       • Example: For October, use 31/10/19.

2. Run a Trial Balance (TB):

   • Generate a TB for the corresponding period.
   • The control code 0.0.60.700 should match the physical cash in the tin.

3. Identify Discrepancies:

   • If the values don’t match, investigate missing or incorrectly posted transactions.

Key Notes

• Accurate Coding: Always code transactions to the correct nominal ledger account to avoid errors.
• Date Awareness: Be mindful of dates when posting transactions to ensure they align with the correct reporting period.
• Reconciliation: Regularly reconcile the petty cash account to maintain accurate records and detect discrepancies early.

Scenarios Where This Process is Useful

• Managing and tracking petty cash expenses.
• Ensuring reconciliation between physical cash and recorded balances.
• Correcting misposted transactions from supplier accounts to petty cash.