Petty cash in the books: entries at top-up time
Why an advice practice records petty cash spending when the float is topped up, not at each purchase, and how to write and match the top-up journal.
By Achekam · · 5 min read · For Financial services businesses in South Africa, Nigeria, Kenya
Every advice practice has one: the cash box in the office manager's drawer that pays for milk, courier fees, a parking ticket at a client's office, or stamps for the documents that still go by post. The amounts are small, which is why the bookkeeping often gets left until somebody notices the box is empty and there is a wad of till slips under the cash tray.
Then comes the question every new bookkeeper asks: should each of those little purchases be entered in the books as it happens, or all together? The short answer from the standard references is: together, when the box is topped up. This article explains why, how to write the entry, and how to make sure the bank withdrawal and the books agree.
A fixed float, restored to the same amount
Most offices run petty cash on what is called the imprest system. The practice decides on a fixed float, hands it to one custodian, and from then on the box should always contain that float: cash plus the vouchers and slips for whatever has been spent.
AccountingTools explains that replenishing a petty cash fund means replacing the amount previously disbursed, by summarising all disbursements and issuing cash back to the fund for that amount. Top-up is therefore not a round number someone picks. It is exactly the total of the vouchers since the last top-up, which brings the box back to the float.
That gives the custodian a simple check at any moment: cash in the box plus vouchers should equal the float. If it does not, something is missing.
Why the entries wait for the top-up
Investopedia explains that petty cash journal entries are recorded when the custodian requests more cash, not when purchases are made from the fund. Spending from the box does not touch the books day by day.
The reasons are practical:
- small purchases would clutter the ledger with dozens of tiny entries;
- the voucher summary at top-up is a natural point at which someone reviews every slip;
- the bank withdrawal that refills the box gives a single, checkable figure for the period's spending.
The trade-off is that, between top-ups, the books show the petty cash account at the full float even though some of it has been spent. For a small float, that difference rarely matters, but it is one reason to top up before month end, as explained below.
Writing the top-up journal
At top-up time, the custodian prepares a summary of the vouchers, grouped by expense type: refreshments, postage and courier, travel and parking, office sundries. Someone other than the custodian checks the slips against the summary.
AccountingTools explains that, on replenishment, the general ledger accountant records the voucher amounts on that summary as expenses in the general ledger. Investopedia describes the top-up itself as a debit to petty cash and a credit to cash.
A worked example in words. The summary shows spending on postage, refreshments and parking. The journal debits each of those expense accounts with its total, and credits the petty cash account with the same combined amount, recording that the cash has gone. The top-up then debits petty cash and credits the bank, as the fresh cash is drawn and placed in the box. After both lines, the expenses are in the books, the bank has gone down by the top-up, and petty cash is back at the float. Many bookkeepers post it as one journal, debiting the expenses and crediting the bank, which has the same effect.
The Investopedia explanation of petty cash covers when the entries are made, the top-up entry and how petty cash appears in the accounts.
Posting it and matching the withdrawal in Achekam
Achekam has no separate petty cash module, and does not need one for an imprest fund. Each business has its own double-entry ledger with a standard chart of accounts, and accounts can be added, so a practice adds a petty cash account if its chart does not have one.
The top-up is a manual journal. Achekam refuses a journal that does not balance or that is dated in a closed month, and a posted journal is corrected only by a reversal, never edited after the fact. Keep the voucher summary and the slips with the month's records, and put its reference in the journal description, so the next reviewer can see what made up each line.
The cash withdrawal or transfer that refills the box then appears on the bank statement. When the statement is imported, bank lines are matched by suggestion and a person accepts each match, so the withdrawal is matched to the bank side of the top-up journal. If the journal has not been posted yet, the line becomes a suggested journal that a person approves, and the reconciliation completes only when every line is matched or explained.
Top up before the month is closed
Because spending reaches the books only at top-up, a month that ends with a half-spent box understates that month's expenses. The easy fix is to top up on the last working day of each month, whatever the box holds.
It also matters for closing. Achekam lets a business soft-close, hard-close and lock a month; a closed month refuses postings from every source, and reopening a hard close needs a second approver. Before closing, the screen checks that no posting suggestions, unposted bills or unmatched bank lines are waiting, so an unmatched top-up withdrawal will be flagged. Post the top-up first, then close. How locking protects reported figures is covered in locking a month once its figures are reported.
Where petty cash shows on the balance sheet
Investopedia notes that petty cash is not a cash equivalent, but is listed within "Cash and cash equivalents" on the balance sheet. In the practice's own trial balance, it appears as its own account with a balance equal to the float, which makes it a quick thing to check when reading your trial balance before the accountant does. If the balance is anything other than the float, a top-up or a voucher summary has gone astray.
A monthly routine
On the last working day of the month, count the box, add up the vouchers, and confirm the two make the float. Prepare the summary, have it checked, post the top-up journal, draw the cash, and match the withdrawal when the statement comes in. Only then close the month.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
