Petty cash should not to be used as an operating fund, i.e., to pay invoices for goods or services, to pay salaries or wages, or to make advances or loans. In accordance with Policy 1505, the petty cash fund cannot be used to: Pay personal loans or salary advances.

Is employee check included in petty cash?

Petty cash funds should never be used to cash checks and should never include personal employee checks. Money should never be borrowed from a petty cash fund as an IOU. Cash advances from the petty cash fund are inappropriate; the expense should be incurred and then reimbursed.

Is petty cash accounts payable?

The accounts payable staff creates a check made out to the cashier in the amount needed to fund petty cash to its stated limit. The cashier deposits the check and converts the funds into cash. The accounts payable staff forwards the petty cash reconciliation form to the general ledger accountant.

Which is an acceptable use of office petty cash funds?

A petty cash fund can be used for office supplies, cards for customers, flowers, paying for a catered lunch for employees, or reimbursing employees for expenses.

What do you need to know about petty cash?

Petty cash accountability A designated employee, the petty cash custodian, accounts for your business’s use of petty cash. When an employee takes money from the petty cash fund, the petty cash custodian must record who took the money, the amount taken, what the money is for, and the date.

Who are the custodians of the petty cash account?

Custodians must be Harvard employees. Establish the petty cash account. To establish a petty cash account, business units must submit a Petty Cash Action Form signed by the Financial Dean or equivalent (or designee) and a Payment Request in HCOM to fund the petty cash account.

How to account for petty cash in office expenses?

The total debit in the expense accounts will equal the credit of the petty cash account. For example, if you have $200 in petty cash receipts, you would then need to record that $200 in the appropriate expense accounts. If all the $200 were “office expenses,” you would debit the office expense account $200.

How does a petty cash journal entry work?

The cashier creates a new check in the amount of the receipts, and swaps the check for the receipts. The petty cash journal entry is a debit to the petty cash account and a credit to the cash account.