As already stated, all payments entered in the general cash book must be made by check, and as in every office there are sundry disbursements too small to justify separate checks, some proper means of making these must be provided.

The usual and proper method of handling such payments is through a petty cash account maintained on the imprest system. The method of keeping this is simple. To open the account, a check for a round sum sufficient to care for such expenditures for a month or other convenient period, is given to the cashier and is charged on the general ledger to "Petty Cash" or "Imprest Fund." This ledger account remains unchanged unless the amount of the fund in the hands of the cashier be increased or diminished.

Form 4. Petty Cash Book.

This is so because, as explained later, subsequent checks drawn to replenish petty cash are not debited to Petty Cash account, but are charged directly to the various accounts for which the petty cash funds have been expended.

From this petty cash fund the cashier makes such payments as are necessary, recording each one in a book similar to that shown in Form 4. Before the entire amount is expended, he casts up each of the columns and finds the total of his expenditures; a check is then drawn for this exact amount, and the cashier again has the original sum with which he started and can repeat the whole process. The check itself is entered on the cash book and divided among the various accounts to which it is chargeable, as shown by the columns of the petty cash book.

It will be noticed that Form 4 differs from the usual form of cash book in that it records disbursements only. This is owing to the fact that after the initial check is drawn for petty cash, each succeeding check is for the exact amount of the expenditures up to a given point, and whenever petty cash is thus replenished by a check from the general cash account, the petty cash book is ruled off and a notation made, substantially as follows:

Total Disbursements............. $........

Covered by Check No........ Date.................

The distribution headings shown on Form 4 are not printed as their position cannot be determined in advance, but are written in whenever the columns are totaled.

It is an excellent practice to provide the cashier with petty cash vouchers, as shown in Form 5, printed on inexpensive paper and bound in pads in the same manner as are the debit and credit slips in a bank. The used vouchers can be filed in bundles, each one of which should represent the disbursements covered by one of the checks from the general account.

AJAX LAND COMPANY Petty Cash Voucher

Jordan, N. C,..................191. .

Received of the Cashier.........................................

.............................................................Dollars

For ................................................................

......................................................................................................................

........................................................

Form 5. Petty Cash Voucher.