The majority of businesses use petty cash accounts to pay for sundry expenses and small purchases. You must nevertheless account for the amounts allocated for petty cash in your business accounts even though individual petty cash transactions are typically too minor to be included in the company’s main balance sheet. Setting up a petty cash account in the Intuit QuickBooks business accounting program allows you to keep track of and record petty cash transactions. You can use petty cash, a handy source of money, to cover little expenses. Here are some tips for handling petty cash and tracking it in QuickBooks Online.
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Petty Cash Definition: What is Petty Cash?
Petty cash is a small sum of money that businesses maintain on hand to pay for little expenses. A small cash fund is another name for it. These funds are used for petty or incidental expenses. Companies will occasionally do this to avoid paying with a credit card or writing a check.
Petty cash costs usually range from $50 to $500, though they might differ by nation and location. The needs of your business should ultimately determine how much petty cash your company owns. Petty cash funds may be used for the following typical uses such as:
- Employee Reimbursements
- Going Away Parties
- Small Office Supplies
- Snacks, Tea, and Coffee for Employees
- Flowers or Cards for Employees or Clients
- Catered Lunch for Clients or a Small Group of Employees
How to Set up a Petty Cash Account in QuickBooks Online?
Here’s a guide on setting up a petty cash account. You should be able to view the money that you transfer from your bank account to petty cash in this account.
- First, You have to go to settings and then select Chart of Accounts.
- Then you have to select New.
- After that, From the Account Type dropdown menu, You have to select Cash and Cash equivalents, And then from the Detail Type dropdown menu, You have to select Cash on hand.
- For the account name, You have to enter Petty Cash.
- When you transfer money from the current account by sending a check or creating a money order, the opening balance is established. You can put a quantity in the Balance field and select as of date if you already have money available for petty cash.
- Lastly, You have to select Save and close.
Create a Petty Cash Account in the New Category Panel
- For the Category, Name Enter the Petty cash.
- Then you have to Select the Select category, and after that select Bank and credit cards and click on Select.
- Choose Cash on hand from the Account type drop-down menu.
- Your Opening Balance will be created when you want to move money from the checking account by writing a check or by transferring funds. To use petty cash if you already have money, then enter the amount in the Starting date and opening balance field and then choose the as of the date and lastly click on Save.
How to Use Petty Cash in QuickBooks Online?
It’s time to deposit funds into the account you just opened. Here’s how to get started and stay on top of your petty cash transactions.
Note: Your business should assign one person the responsibility of overseeing the petty cash box and recording all withdrawals.
Put Cash In
- Take a little amount of cash out of your checking account and place it in a locked cash box.
- In QuickBooks Online, record the transaction.
- If you made a cashier’s check:
- First, Choose + New.
- Then choose Check.
- As the payee, choose Petty Cash. If petty cash isn’t on the list of payees, choose +Add new.
- In case you took out cash without writing a check.
- Then first you have to select + New.
- Then you have to select Transfer.
- If you made a cashier’s check:
Note: To record any specific details you can use the memo box within a transaction.
Take Cash Out
To keep track of who, When, and what was purchased with the money, Make a note on a slip of paper whenever you hand cash to an employee or use petty cash yourself. This serves as a kind of receipt for the money you withdraw.
Using the petty cash account as the payment account, record taking money from the petty cash as an expense in QuickBooks. The sum of the amounts written on the slips of paper and the money you have left should always equal the sum you deposited in the box.
Tip: Reconciling your petty cash account on a regular basis is a smart idea. After that, since the transactions are now in QuickBooks, you can transfer the paper slips to your long-term record keeping.
With the help of the above blog, you can easily set up and use Petty Cash in QuickBooks Online. All the information related to this is properly described in the above blog. In case you still face issues related to this then you can connect with Dancing Numbers team via LIVE CHAT.
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Frequently Asked Questions (Faqs)
How to Record Petty Cash Transactions?
Your petty cash cashier is required to record a journal entry in your records whenever they deposit money into the petty cash fund. Your Petty Cash account must increase, and your Cash account must decrease, as seen by the entry. Debit your Petty Cash account and credit your Cash account to show this.
What Account does Petty Cash go in?
The balance sheet’s current assets section includes petty cash. This is due to the balance sheet’s line items being arranged according to their liquidity. Due to its high liquidity, Petty cash can be found near the top of the balance sheet.
What Should Petty Cash not be used for?
Petty cash shouldn’t be used as an operating fund, Which includes paying salaries or wages, Paying invoices for goods or services, or making advances or loans.