MANAGEMENT
PETTY CASH FUND MANAGEMENT
I. Definition of Cash
• Cash is the standard medium of exchange and the basis for
measuring and accounting for all other items
• It is generally classified as current assets
• Cash consists of coin, currency, an available funds on
deposit at bank and other financial institutions.
• Cash must be immediately available for the payment of
current obligation and must be free from any contractual
restriction. It is available for unrestricted withdrawal.
II. Classification of Cash
A. Cash in Bank
• It is included saving accounts, R/C
B. Cash on Hand
• It is available in the company for
paying daily operational expenses.
• Cash on hand is prepared to pay
for small payment called petty cash
III. How is Petty Cash Transaction
Controlled and Reported?
As control measures of petty cash fund, the procedures are widely
used:
Payment received:
Cash 8,800,000
Date Description Journal (Rp)
2008 16 Petty cash funds are too small and Petty Cash 2,500,000
needed to increase petty cash fund
March Cash 2,500,000
balance, Rp. 2,500,000
31 At the end of period, the expenditures Adj.
are unrecorded for the following items:
• Postage expenses Rp. 300,000 Postage expenses 300,000
• Utility expenses Rp. 1,200,000 Utility expenses 1,200,000
• Miscellaneous expenses Rp. 100,000 Miscellaneous 100,000
expenses
Petty Cash 1,600,000
April 1 At the beginning of the next period, the Petty Cash 1,600,000
reversing entries to be made
Postage expenses 300,000
Utility expenses 1,200,000
Miscellaneous 100,000
expenses
The Fluctuating System
A. The differences between imprest system and fluctuating system
Balance
Date Description Ref Debit (Rp) Credit (Rp)
Debit Credit
10 Miscellaneous
expenses 3 300,000 1,200,000
14 Cash 3 2,500,000 3,700,000