Petty cash book is maintained for recording _______.

Question

Accepted Answer

The correct option is 2:
Petty expenses paid in cash

The Petty Cash Book is a specialised subsidiary book of accounts maintained exclusively to record small, routine, and miscellaneous cash payments, commonly known as petty expenses. These expenses include minor items like postage, stationery, office refreshments, taxi fares, and small reimbursements to employees, which are impractical and inefficient to process through the main cash book or by cheque. The key concept is that the book tracks the systematic disbursement of physical cash from a small, dedicated 'petty cash fund'. This system, often operated on the 'imprest' principle, centralises the record-keeping of these numerous minor transactions, thereby ensuring strong control and accountability over small cash outflows while significantly reducing the number of entries in the main cash book.

The incorrect option is 1:
Petty incomes only
This is incorrect because the fundamental purpose of the Petty Cash Book is to record *outflows* (expenses), not *inflows* (incomes). While the fund is replenished, which is an inflow, the day-to-day entries overwhelmingly focus on the tiny payments made. The recording of income, whether petty or major, is primarily the function of the main Cash Book or the general ledger, not the subsidiary petty cash record.

The incorrect option is 3:
Petty incomes received in cash only
This option, similar to option 1, focuses on income, which is misleading regarding the book's primary role. Although the initial setup or subsequent replenishment of the petty cash fund is a cash receipt, the ledger itself is a detailed analysis of *expenditures*. To suggest that it is maintained solely for recording petty cash incomes is a factual misrepresentation of its utility and accounting purpose.

The incorrect option is 4:
Petty incomes and petty expenses
While the Petty Cash Book *does* record petty expenses, it is not accurately described as a record for both incomes and expenses in the same way a standard Cash Book is. Its defining feature is the detailed tracking and classification of expenditures. Including "petty incomes" as an equivalent and defining function overstates the importance of income entries, which are rare and typically involve only the replenishment amount, as opposed to the continuous stream of small expense recordings.