Negative Balance in Petty Cash Account

Sundry creditor account should be created in Cashier name.

After claiming the amount from Company, entry may be reversed......

There should not be any negative cash balance on any day. rather, amount may be by cashier-sundry crediot account.

Such event should be unusual. otherwise, company should provide adequate cash..

by

Siva

sir you can 

open a employee petty cash a/c in your books and whenever your petty cash goes negative 

then debit him with that negative amount which shows and creditor of that amount and 

when you formally paid amount on next day first credit the employee petty cash a/c in which you will have and idea that at what amount employee has spent in our firm and

finally paid excess on that day your cash balance will never be negative

Cash account will always have dedit balace, there cannot be any negative balace.

The situation which you are posting is of Imprest account sort of thing i.e an epmloyee has been given Rs 5000/- or so for petty expenses and he will recoup that amount when he exhaust the same.

In case whwn he spend more than the imprest amount lets say Rs 5500/- then only enter the voucher of Rs. 5000/- and then make a recoupment entry after that pass the next Rs 500/- entry .This will not show any negative balance.

Thanx.

Rohit, Silent Gang, Sudhir, Vikash & Ritesh, thanks a million for taking out your valuable time to reply my query.

Keep up the good work. 

. 

Cash Acoount always positive not in negative

this type of accounting is wrong.

So if possible then u first lend\advance to company then book the cash exp entry.

Hey friends ,

Assuming such a situation remains in the books of account, will the same be disallowed by the Income tax authorities for the reason that such expenses relating to negative expenses was not met by the firm's/company's cash

Petty cash can never be negative and has to show debit balance only.. expenses incurred over and above that can be provided in the books of account without taking the cognisance of whether the cashier has put in any amounts or not..

P.S. The fact that the cashier puts in his own cash is a big alarm.. how can it not be possible that he is not withdrawing any cash for personal use.

Just debit cash and credit petty cashierbeing cash received from Mr. X (say he is petty cashier)

pass following

Cash A/c  __________________________ Dr.  XXXX

       To Mr. X________________________________XXXX

in it is the  balance sheet date then Mr. X will be shown as under loans  and advances, Advances head

Dear Hareesh,

The creditors's position shown to cover negative cash will not effect the deduction of expenses as otherwise also the expenses and paid in cash or credit is availed for it from bankers, creditors, service providers.

However for a individual to show the investments deductible under Sec 80-C not out of income but by loans may create a issue.

Originally posted by : Hareesh H Sharma
	Hey friends , Assuming such a situation remains in the books of account, will the same be disallowed by the Income tax authorities for the reason that such expenses relating to negative expenses was not met by the firm's/company's cash

Dear Hareesh,

The creditors's position shown to cover negative cash will not effect the deduction of expenses as otherwise also the expenses and paid in cash or credit is availed for it from bankers, creditors, service providers.

However for a individual to show the investments deductible under Sec 80-C not out of income but by loans may create a issue.