AccountingHub
P1

A small fund, carefully tracked

Spend from the $100 fund, then replenish it and watch which accounts move.

Step 1 of 3

Establish a $100 petty cash fund.

Petty cash

$0

Cash

$1,000

Expenses recorded

$0

is set up under an imprest system: the fund is fixed at one amount, and the keeps receipts for everything spent from it. The Petty cash account itself only moves when the fund is created or its size changes.

Replenishing the fund debits whatever the receipts were actually for — postage, delivery, supplies — and any shortfall, never Petty cash. That is the detail almost everyone gets wrong the first time.