Question

How is the petty cash book related to the main cash book?

Answer 1

The petty cash book is related to the main cash book as a subsidiary cash book specifically for recording petty expenses. The chief cashier advances a fixed amount to the petty cashier, recorded as a credit in the main cash book and a debit in the petty cash book. The petty cash book records small payments like postage and cartage, while the main cash book records all receipts and large payments. The petty cash book shows only petty expenses and is simpler, saving time and effort for the chief cashier. It acts as both a journal and ledger for petty cash transactions, but only one aspect is posted to the ledger, maintaining control and accuracy in cash management.