36. Expense Account

The expense account is generally a simple account by that name to which is charged all items of expense. It is sometimes necessary to credit this account with rebates, cash received unexpectedly from customers for telegrams previously charged, for check books, etc. It is frequently necessary to analyze the expense account, and if some method of daily analysis is kept up, the figures will always be ready for use when called for. If any style of the Boston ledger is used as a general ledger it will be found absolutely necessary to keep a separate record. The petty items are the most annoying. To simplify this feature most banks allow the paying teller to carry expense items in his cash until the end of the month and then put through one entry for the total. This is objectionable even if the teller be not allowed to hold an item unless initialed by an officer. A better plan is to set aside a sum as a petty cash fund and make small cash disbursements from this fund. The petty cashbook should start each month with its debit of the round sum set aside and if the funds run out during the month, should be replenished from the paying teller's cash. The credit side of the petty cashbook should be ruled with a sufficient number of columns to provide such analysis of the expense as is desired. A good form is shown in Figure 14 on page 48. By using such a record as this, but one entry is necessary in the expense account for these numerous items. If desired, the totals of the several columns may be posted. Carrying this idea a little further, it would be possible to include salaries, rent, taxes and heavy expense items in the columnarized book by providing columns. Then, when a check is issued or a large payment is made from funds outside the petty cash, it should be charged to the petty cash like a receipt and immediately credited out, distributing the payment to the proper columns. At the end of the month, the journal entry covering petty cash would be very much larger than the petty cash fund, but the amount of money handled through the account would be no larger than if the payments were made and charged outside the record.

Petty Cash

Figure 14. Petty Cash.