A Complete Guide to Cashflow and Petty Cash in Business

by Kristen White Blogger Bookkeeping is the factor that determines whether a business succeeds or fails. It is necessary to find a bookkeeping and accounting in London experts since they specialise in matters related to it. The consequences of inadequate systems of managing money in business include internal theft and failed audits.

When a firm decides to hire bookkeeping and accounting in London firm, it stands to accrue benefits. Some small businesses fail because the bookkeepers employed are not qualified.
 
Meaning and Importance of Cash Flow

It is the money that the business is receiving from daily activities. A cash flow statement is essential for making financial decisions, either annually or quarterly per year. This is why you need to find accounting businesses near me that are reliable and reputable.

Activities that fall under cash flow operations include:
 

• The stock added or reduced
• Product or service sales
• Short-term payable and receivable accounts

Benefits of Knowing Your Cash Flow

• Ability to project the short-term capital of a business
• It helps to reassure shareholders or investors that the business is profitable
• It can serve as a selling strategy for investment

Petty Cash

Customers buying goods pay often using cash. Businesses use software like XERO, Quickbooks, digital wallets, mobile application software, or debit cards to handle all cash payments.
 
Benefits of Petty Cash Book

• It minimizes voluntary spending
• Cash is available to employees without the need for lengthy, time-consuming procedures to process the funds
• It prevents managers from paying for small purchases from their pockets

Steps to Setup a Petty Cash Business Fund

Create a Bank Account

Implement an Offline Petty Cash System

It will track the usage of funds. Cut checks when you want to add more money. Attach receipt copies to a receipt stub.

Steps to Track a Petty Cash Business Fund

• Create an account for the petty money and add it to your chart of accounts in the assets category.
• Calculate how much money you want to go into the account
• Collect receipts for all purchases from the qualified expenditure
• Find a safe place to store the money which is accessible if needed
• Delegate the duty to record, disburse cash, and bookkeeping to someone you trust

Steps to Balance a Petty Cash Business Fund

• The process begins when the first check payable with cash is written and issued
• Any funds given to an employer or employee must reflect in a receipt
• After the funds get used up, add the cash in the receipts and check if its equal to the starting amount
• Summarise the receipts and use them to receive a new check from the company

Steps to Complete the Process of Replenishing a Petty Cash Business Fund

• A journal to enter and record all purchases made through petty cash. Expense accounts like office supplies get debited while the petty cash account, which is the total of all receipts, gets credited.
• A new entry journal that accounts for funds received through the original check. The petty cash account gets debited while the cash at the bank account gets credited.

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Created on Dec 27th 2019 05:18. Viewed 294 times.

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