Tracking Petty Cash
Before making any changes, ask your accountant if writing journal entries or changing the account type is the best way for your business to track petty cash.
Tracking Petty Cash Using Journal Entries
Most companies follow the standard accounting practice of using journal entries to track petty cash transactions. When you establish a Petty Cash account, write a check for the cash you want to keep on hand, and cash it. Make a journal entry that debits the Petty Cash asset account and credits the journal account for the bank.
Every time you spend cash from the Petty Cash account, use your receipts to make journal entries that debit the expense accounts for each receipt and credit the Petty Cash asset account for the cash spent. Write and cash a check to replenish the petty cash funds as needed.
For information about journal entries, see Making Journal Entries.
Tracking Petty Cash Using the Write Checks Function
To use the Write Checks function for petty cash expenses, set up your Petty Cash account as a Bank account. As a Bank account, your Petty Cash account appears as a choice on the Check page at Transactions > Bank > Write Checks. Use the Write Checks transaction to record expenses.
Write and cash a check to fund your petty cash. Then write a check against the Petty Cash Bank account to record expenses paid with petty cash.
You can also enter a Bill for the purchases you paid through Petty Cash, then pay the bill from the Petty Cash account.