This is the difference between Big Cash and Petty Cash Financial Statements
In financial statements there is what is called large cash and petty cash, of course there is a difference between large cash and petty cash in their functionality.
After getting to knowcash flow, maybe you are familiar with the terms big cash and petty cash. To manage personal or company finances, you also need to go through big cash and petty cash. However, do you already know the difference between big cash and petty cash?
If you don't know the difference between big cash and petty cash, you don't need to worry. Because now you will be invited to understand what is the difference between big cash and petty cash and even their functions.like too cash flow and before already learn the cash flow formulaNow let's understand the difference between large cash and petty cash financial statements.
Come on, see the explanation regarding the difference between big cash and petty cash!
Understanding Big Cash and Petty Cash
Cash at bank or big cash is a number of funds that have been prepared by your company to pay expenses that are quite large. Usually this type of cash is also not given in cash in routine operational activities, because the amount of expenditure will be too large.
Big cash will also usually use a bank reconciliation procedure, which is a periodic recording carried out by the bank and also the company.
While petty cash is also called pet cash are funds issued by the company on a regular basis in small amounts.
This petty cash will definitely be owned by large companies and also Small and Medium Enterprises (SMEs), pet cash This will also always be used to manage finances. Petty cash fund holders are also called secretarial bureaus or are usually entry-level finance officers.
Difference between Big Cash and Petty Cash
After knowing the definition of large and petty cash, you can actually get clue regarding the differences between the two. In general, big cash spends money for quite large operational activities. While petty cash is used to pay for relatively smaller expenses, petty cash funds are usually taken from small daily or routine activities.
Then in its functional method, petty cash has two recording methods, namely the non-permanent recording method or the non-permanent recording method fluctuating fund system and method of recording fixed funds or imprest fund system,
Examples of petty cash applications in companies can be in the form of transportation costs, travel costs, or office supplies costs. Other examples of petty cash outlays could be payments for electricity, internet, or entertainment expenses. While the large cash payments are used for the cost of renting a place, purchasing assets, and also paying debts. Large cash payments require funds above IDR 1 million.
Petty Cash Purpose
With this petty cash, it turns out to be quite helpful in managing company finances because the purpose of establishing petty cash is as follows:
1. Dealing with company equipment problems
The characteristics of petty cash are to pay for company equipment such as office stationery or whatever is needed by the company and usually the cost of company equipment will have a smaller cost so it is more suitable to use pet cash.
2. Avoiding uneconomical payment allocations
By using petty cash or pet cash can help companies to avoid the occurrence of large payment allocations, because in petty cash the company will not pay dearly for small transactions.
3. Lighten the work of employees
Making a cash book can indeed ease the work of employees, because with petty cash, records will be recorded neatly.
4. Accelerate funding activities
The petty cash function in the company can be used to speed up funding activities if there is a company policy that is quite sudden.
Big Cash Goals
While the purpose or function of big cash are as follows:
- Make payments in large enough amounts because, as mentioned above, the characteristics of big credit are to incur non-cash costs for expenses above IDR 1 million.
- Having large cash can also help to speed up operational activities which would normally require a large amount of money.
- Large cash is also used to avoid payment methods that are impractical or uneconomical for the company.
- Finally, large cash is useful as a direct or indirect fund to pay high costs by issuing checks.
Petty Cash Method
There are two ways to record the petty cash method, namely the fixed method and the fluctuating method
Fixed Method
Fixed method or imprest fund system used to record expenses whose nominal amount will always be the same, usually this happens because the outgoing and incoming funds are also the same. Thus, the petty cash balance will always remain constant.
Non-Fixed Method
The variable method is also often referred to as the fluctuating method, i.e. the method of recording for an ever-changing nominal is different from the fixed method. Usually the fluctuating method occurs because of the inequality between income and expenditure.
So you could say the difference between big cash and petty cash is in the recording, purpose, function, and also the type. However, large cash or petty cash are two different things and must be owned by companies, because they are useful for monitoring the movement of company funds. To make big cash and petty cash, you can also go through: for mobile devices to report the accounting that you can find on the internet.
Big Cash Method
Big cash will usually use the bank reconciliation recording method, which is a periodic record made by the bank and the company.
So the difference between large cash and petty cash is certainly different in terms of functionality, benefits, methods, and types. However, these two cash must still be in the company's financial statements. You can use for mobile devices to report the accounting for the general ledger and petty cash journals.