What is petty cash? Petty cash is physical cash that a company or organization keeps on hand. Usually the money is in a lock box, locked desk drawer, in a safe or in the owner’s wallet if it’s a small company. Only certain people are authorized to take the cash and spend it on company expenses. 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.

Suppose we replenished petty cash (cash on hand) by going to the bank machine and withdrawing $300 for petty cash. How do we record that? We take our ATM slip and go to QuickBooks, + New, Expense and start with selecting Cash in Bank (your bank account) Payment account at the top. The category is Cash on Hand (petty cash). Record the date and the ATM slip number should be entered in the Ref. no. Record the amount. Entering a description is optional but it’s good practice to enter something.