What is petty cash. Petty cash is physical cash that a company or organization keeps on hand. Usually i the money is in a lock box, locked desk drawer or in a safe. Only certain people are authorized to take the cash and spend it on company expenses. In a small company, the petty cash fund could simply be the owner’s wallet. As an accountant or bookkeeper you need to ensure that you have a account for petty cash in the chart of accounts. Petty cash is a bank type of account. Petty cash behaves like a bank account.

When you pay cash for something, you need to get a receipt from that supplier. The number that’s on the receipt is the number that you will record in QuickBooks. That number from the physical receipt is entered on the Expense window in the reference number box.

What happens when we pay cash for expenses? Expenses go up and Petty Cash goes down. We debit expenses and credit Petty Cash.