RavadaAccounting

Petty Cash

1. Establishing the Petty Cash Fund

When you create the fund, you transfer money from your main cash/checking account into the petty cash box.

Debit: Petty Cash (Asset account)

Credit: Cash / Checking

Example (Setting up a $100 fund):

Debit: Petty Cash $100

Credit: Cash $100

2. Making Disbursements (No Entry Required)

When employees take money from the fund for minor expenses (like office supplies or postage), the custodian collects a receipt or petty cash voucher. No journal entry is made at this time.

3. Replenishing the Petty Cash Fund

When the fund runs low, you cash a check to restore the petty cash box to its original balance. You debit the respective expense accounts for the items purchased and credit your main Cash account for the replenishment amount.

Example (Replenishing $85 of receipts: $50 for Office Supplies, $35 for Postage):

Debit: Office Supplies Expense $50

Debit: Postage Expense $35

Credit: Cash $85

4. Handling Cash Over and Short

If the remaining cash plus the total receipts do not equal the original fund amount during replenishment, record the difference in a Cash Over and Short account.

Shortage (Missing money): Debit Cash Over and Short (as an expense)

Overage (Extra money): Credit Cash Over and Short (as income)

If you have a specific scenario or numbers you are trying to record, let me know the fund amount and receipt totals and I can write out the exact journal entry for you.

Petty Cash Business Scenarios - Check in Gemini

Oracle Fusion:

In Oracle Fusion Applications (Cloud ERP), managing small expenses directly through the General Ledger (GL) using manual journal entries is generally avoided. Instead, organizations leverage the Accounts Payable (AP) module to maintain clear audit trails, prevent hundreds of minor suppliers from cluttering the vendor master, and properly track cash flows. [1, 2]

The most common and clean approach to execute this in Oracle Fusion is the Prepayment Invoice Method. [1, 2]

The Prepayment Invoice Method Process Flow

Under this method, the employee responsible for handling the cash is created as a Supplier in the system (e.g., "Mr. Giri – Petty Cash Custodian" or a generic name tied to a specific location like "Petty Cash – HO"). [1]

Step 1: Issuing the Petty Cash Advance (Imprest Setup)

To establish the fund, you create and pay a Prepayment Invoice in Oracle Payables. [1]

Action: Create a Prepayment Invoice type in Oracle Payables against the petty cash custodian. [1, 2]
Invoice Accounting Entry:
- Debit: Prepayment Account (Employee/Petty Cash Asset Account)
- Credit: AP Liability Account [1, 2]
Payment Accounting Entry: (When you cut the check or send an electronic transfer to the custodian to fund the box)
- Debit: AP Liability Account
- Credit: Cash / Bank Clearing Account [1, 2]
Net Impact: The asset sits in a Prepayment ledger account awaiting expense application. [1, 2]

Step 2: Recording Incurred Expenses (Replenishment Submission)

When the custodian hands out cash for small items (stationery, refreshments, couriers) and returns to the system to log their receipts, you create a Standard Invoice in Oracle Payables. [1, 2]

Action: Enter a Standard Invoice matching the sum of the receipts. Allocate the distributions directly to the respective natural expense accounts. [1]
Invoice Accounting Entry:
- Debit: Respective Expense Accounts (e.g., Office Supplies, Postage, Meals)
- Debit/Credit: Cash Over and Short Account (if there is a minor variance between receipts and cash)
- Credit: AP Liability Account [1, 2, 3]

Step 3: Squaring Off and Netting the System (Prepayment Application)

To settle the outstanding balance without writing a new check, you must apply the original prepayment to the newly created standard expense invoice in Oracle Cloud Payables. [1, 2]

Action: Go to Invoice Actions and select Apply/Unapply Prepayments. Select the initial prepayment. [1]
Application Accounting Entry:
- Debit: AP Liability Account
- Credit: Prepayment Account (Employee/Petty Cash Asset Account) [1, 2]

The Final Result: The liability nets out to zero, the prepayment asset account is cleared back down, and the expenses are accurately represented in your financial statements. [1, 2]

Alternative Method: Centralized Petty Cash via Dummy Bank

For highly automated environments where companies do not want to map individuals as suppliers, companies configure a Dummy Bank Account inside the Oracle Fusion Cash Management module. [1]

Instead of prepayments, expenses are logged as Standard Invoices against a generic corporate "Petty Cash" supplier record, and the payment is routed and "cleared" digitally against the designated petty cash dummy bank account.

Oracle EBS & Fusion:

https://youtu.be/j6yQHfQefqw?si=Nw9VlRmQrjU3InWZ

https://youtu.be/AR3ul5BCsjw?si=skKpIQwpzNZrZFcj

RavadaAccounting

Thursday, October 1, 2026

Cash Management Business Scenarios

Petty Cash

Cash Management Business Scenarios