CAT / FIA FFA Syllabus C. The Use Of Double-entry And Accounting Systems - Ledger accounts and books of prime entry - Notes ^{2 / 3}

Cash Book

The cash book records receipts and payments into and out of the business bank account. These would include receipts and payments made by bank transfer, standing order, direct debit and bank interest and charges, directly by the bank.

Sales Day Book

The sales day book lists all sales made on credit. It is used to keep a list of all invoices sent out to customers each day.

Sales Returns Day Book

When customers return goods for some reason, a credit note is raised. All credit notes are recorded in the sales returns day book.

Purchase Day Book

The purchase day book lists all purchases made on credit, i.e. a list of all invoices it receives.

Purchase Returns Day Book

The purchase returns day book records credit notes received in respect of goods which the business sends back to its suppliers.

Petty Cash Book

Most businesses keep a small amount of cash on the premises to make occasional small payments in cash, e.g. staff refreshments, postage stamps, to pay the office cleaner, taxi fares, etc. This is often called the cash float or petty cash account. Therefore, the petty cash book is a cash book for small payments.

Very often these businesses use the imprest system. Under the imprest system, the petty cash is kept at an agreed sum, so that each topping up is equal to the amount paid out in the period.

Example

The amount of money in petty cash is kept at an agreed sum of $250.  Expense items are recorded on vouchers as they occur and the total voucher payments for the period were $55. Therefore:

The cash payment required from the bank account into petty cash is equal to $55, i.e. total of the voucher payments since the previous top-up.

Keeping cash (even in small amounts) on the premises is a security risk. Therefore a petty cash system is usually subject to strict controls.

1. Payment is only made in respect of authorised claims.
2. All claims are supported by evidence.