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Petty Cash

Acorn2oak
  • 167 posts
  • # 73041

Hi

Can i ask what defines the amount that would equate to a petty cash sum - i am looking at a question that talks of petty cash in terms of thousands of pounds.

Regards

Acorn

  • "Helping small acorns become large oaks"

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Geoff
  • 180 posts
  • # 73043

Is this an exam question?
Acorn2oak
  • 167 posts
  • # 73056

Hi

Not the actual exam, but it is an exam style exercise

Regards

Acorn

  • "Helping small acorns become large oaks"

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Geoff
  • 180 posts
  • # 73062

It really depends is the answer!

I have seen instances where the Petty Cash account balance runs into thousands - usually because the trader couldnt be bothered to keep receipts in order - if at all.

I would treat such examples as Drawings.

If on the other hand there are large cash withdrawals and no explanations then it could be a case of Money Laundering to be considered.
Jocelyn
  • Member
  • 71 posts
  • # 73064

Geoff said:

“

It really depends is the answer!

I have seen instances where the Petty Cash account balance runs into thousands - usually because the trader couldnt be bothered to keep receipts in order - if at all.

I would treat such examples as Drawings.

If on the other hand there are large cash withdrawals and no explanations then it could be a case of Money Laundering to be considered.

”
Acorn

I know the question on the mock you mean, I had one just the same.

Some small business receiving cash from cash sales do not bank it, but use it to pay their suppliers.  This is done to avoid paying the bank charges occured when writing cheques or paying by bacs. 

Both transactions are posted into the accounts.  The nominal accounts used are usually Petty Cash or Cash in Hand.

One disadvantage of doing this, is having a sizable sum of money on the premises which could lead to theft.

Hope this helps

Jocelyn
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