Topping up and spending petty cash

Topping up and spending petty cash

Petty cash requires two regular actions: topping up (replenishing the fund from the bank) and spending (recording what was spent from the fund). This article covers both workflows.

Before you start

• You have a petty cash account already set up in your chart of accounts.
• You have a bank or cash account from which you can draw money to top up petty cash.
• You have receipts or notes for any expenses you want to record as spending.
• You know the petty cash account name or number to reference when recording transactions.

Topping up petty cash

When petty cash runs low, you replenish it by moving money from the bank. This is recorded as a journal entry.

1. Go to Transactions Open in Usystems and create a new journal entry.

2. Enter the date and a brief description (e.g., "Top up petty cash").

3. Record two lines:

   • Debit: Petty Cash account (the amount you are adding, e.g., 10,000 AFN)
   • Credit: Bank account (the same amount, 10,000 AFN)

4. Save the entry. The petty cash balance increases; the bank balance decreases.

Recording petty cash spending

As you spend from petty cash, you record the expense (or purchase) and note that it came from petty cash. There are two common workflows:

Option A: Record expenses as you spend

If you log expenses immediately:

1. Go to Transactions Open in Usystems and create a new journal entry (or use the document form—e.g., Expenses if your workflow supports it).

2. Record:

   • Debit: The appropriate expense account (e.g., Office Supplies, Meals & Entertainment)
   • Credit: Petty Cash account

3. Enter the amount and save.

Option B: Reimburse the petty cash custodian at period end

If the petty cash custodian spends from hand and you reimburse them monthly:

1. Collect all receipts and spend details for the period.

2. Go to Transactions Open in Usystems and create a summary journal entry:

   • Debit: All relevant expense accounts (office supplies, postage, meals, etc.) with the amounts from receipts
   • Credit: Petty Cash account (total of all spending)

3. Save the entry. The petty cash balance is reduced by the total spent.

Accounting impact

• Topping up: moves money from bank (asset) to petty cash (asset). No expense is recorded yet.
• Spending: reduces petty cash (credit) and increases the relevant expense accounts (debit). The expense is now recorded in your income statement.

For example: you spend 500 AFN on office supplies from petty cash.

• Debit: Office Supplies Expense (500 AFN)
• Credit: Petty Cash (500 AFN)

Tips & common mistakes

• Keep receipts for all petty cash spending. At reconciliation, you should have receipts matching the amount spent.
• Do not forget to record spending—petty cash only works if you diligently log expenses. A large gap between topping up and recording spend makes reconciliation difficult.
• Use the same petty cash account for all top-ups and spending. Do not create multiple accounts for the same fund.
• Reconcile monthly: count the physical cash in the petty cash box and compare it to your account balance. They should match (or differ only by unrecorded spend). Investigate any large discrepancies.