Petty cash - Screencast script, do not copy word for word, just a guide for a 10/10 script PDF

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Screencast script, do not copy word for word, just a guide for a 10/10 script...

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Welcome to this informative screencast on Petty Cash. The first question we must ask is, what is a petty cash fund, and why would a business need to establish one. The most important thing to understand is that businesses require disbursements of cash to be monitored and recorded through authorised electronic transfers or double signed cheques. However, many instances arise where a small amount of cash is needed for an item quickly, like extra staplers or a stamp for mailing an envelope. In these situations, it is time consuming to write out a cheque for such a minor amount of cash, and so the administrative burden of control activities is lessened by establishing a petty cash fund which eradicates the need for writing out a cheque. A petty cash fund, therefore, is simply an amount of cash kept on hand by a business to pay for small expenses. Now that we know why a business would need a petty cash fund, lets take a look at how they are established. The first thing to do is write a cheque for the amount of the fund, cashing the cheque and placing the money in the care of a designated employee. Suppose an interior design collective, Leafy Design Co., cashes a 200 dollar cheque to establish a petty cash fund, we would debit petty cash $200 and credit cash $200 to establish the fund. Assets = Liabilities + Equity and the accounting equation balance. Cash has not been dispersed outside of the company at this stage so no change in total assets. Making payments from the fund is simple. Cash can either be taken from the fund, or employees can seek reimbursements from the fund for payments they have personally made. In each instance, receipts are to be collected and journal entries do not need to be made, only when the fund is replenished. As the cash in the petty cash fund decreases, there comes a time where the fund needs to be replenished. Firstly, we acknowledge the remaining funds, in the case of Leafy Design Co., lets say 15 dollars is left over after purchase of office supplies. We wouldd hen casha cheque for the amount that brings the total cash in the fund back to the original balance of 200, with 175 dollars. A report will then be compiled....