Petty cash in QuickBooks is already a common financial accounting system and is a Pre-specified amount that is made out of the budget. It spent according to the need and is rebuilt again after a period or when it runs. But without a petty account, it is difficult to keep a record of daily basis expenses. By using a petty account for QuickBooks petty cash, you can easily track all expenses and accounting data.
Set up and use a petty cash account in QuickBooks?
You know well petty cash is a small amount of money and if you are a user of QuickBooks then it is the best offer for you. Where you can track your business expenses in QuickBooks by making a petty cash account. You can set up your account, transact, record, petty expenses or accounting. This software is one of the best cash day books used in Bookkeeping. Expences on simple things could be office supplies, small repairs, paper, cleaning, fixing cabinets, printer cartridges and so on cash purchases are made by the Owner or managers. if you also want to keep a small amount of cash for your store or business expenses? So for this, you need to track and record petty cash expenses in order, you should use the QuickBooks petty account.
For any Business or small store office expenses, Select a dollar amount in the petty account to cover expenses of a month and more. To set up petty cash in QuickBooks Follow below steps:
- Go to the Settings and select Chart of Accounts.
- Then click New.
- From the Account Type drop-down, select Bank.
- From the Detail Type drop-down then click Cash on hand.
- Enter Petty Cash for the account holder’s name.
- The opening balance will be created when you move money from the checking account by writing a check or transferring funds. If you already have money to use for petty cash, enter the amount in the Balance field and select the as of date.
- Select Save then Close.
Create a Bank in QBO
When not a real bank, That is the account type that must be selected in QBO. to set this up in QBO click the gear icon in the upper right of the screen and then a chart of accounts. Click new in the upper right corner. Select bank for account type cash on hand for detail type and click save and close. Now your new account is set up.
Funding the cash on hand bank
To fund your petty cash box you will likely withdraw money from your checking account. To start this process, within QBO use the check-writing screen just as you would if paying a vendor. Select the positive sign in the upper right portion of QBO and then click check. Instead of selecting an expense account when asked for the category under the category details section, select the name of your cash on hand bank. This will be debit the cash account, increasing its balance.
Started to manage petty cash
As you had created your account, now this time to put some money into your account. Also, keep updated about your petty cash.
As you know, where you have to put your cash in
- Take some cash from your checking account and put it in a locked cash box.
- Maintain a record of the transactions in QuickBooks Online.
- If I had written a check for cash: choose to create and then check. Then choose petty cash as the payee. And then choose to add new. If petty cash is not there in the payees’ list.
- If you didn’t withdraw your cash without writing a check: choose to create and then transfer.
Take cash out
When you give cash to the employee we make a record with a paper of slip. Which contains to whom, which, where and for what the money was used. This is like a receipt that is used to track the cash that you had. For all the times, the amount on a slip of paper and the cash you have left should add up to the amount you deposit in the box.
Uses of petty cash
It is helpful for providing funds to the business units with sufficient cash to cover minor expenditures.
How we can do cash accounting and recording in petty cash
- Accounting:- This accounting involves establishing petty cash policies, setting up a cash log and creating journal entries. Accounting can be done manually with bookkeeping software and an expense card.
- Recording:- Record is the major component of the petty cash as it keeps all the records of withdrawal of the money and put into the cash box. it is bookkeeping of every transaction.
Step 1: Policies and procedures
- It is to assign a person to be in charge of petty cash. It knows petty cash custodian.
- There should be someone to whom you can trust to adhere to the petty cash procedures.
- This is to inform all the employees that receipt is mandatory for all the petty cash purchases.
- A scanner will help you to scan your receipt that help you to be safe in future use. In case you lost the receipt.
- The cash account should be monthly basis friendly relation or each time to restore.
- The cash purchase records on a monthly basis in the books to maintain a record.
Step 2: Set up a petty cash log
This cash log detailed all the deposits and withdrawals made from the petty cash account. It includes all the information and also a brief description. Such as what purchase, to which account is to change, who receives the funds and who grants it. So, you should keep all your monthly information.
Step 3: Record a general record of petty cash
At least once in a month cash transaction should record. As well as you can use accounting software like QuickBooks accounting software and also a spreadsheet to keep track of your income and expenses. These purchase recorded an increase (as a debit) to an expense account and decrease (as a credit)to a cash account
Step 4: Restore the relationship between the cash account
Generally, it keeps all the information of the cash account it keeps all the journal entries for future use. As I believe in you require a receipt of all transactions.
I hope this will help you to understand petty cash and how you can use petty cash in QuickBooks. If you want more discussion on this topic, You can talk to a QuickBooks ProAdvisor.