Month-end close Updated November 2026

Petty cash reconciliation

Count the cash in the box, add up the vouchers and receipts, and compare the total to the fixed fund amount: Cash on hand + Vouchers should equal the fund. Any gap is cash over or short. Replenish with a check for the vouchers plus any shortage, debiting the expenses and crediting Cash.

Syntax

Fund amount = Cash on hand + Receipts/vouchers +/- Cash over/short; Replenish: Dr Expenses / Dr (Cr) Cash Over and Short / Cr Cash

Part	What it is
`Fund (imprest) amount`	The fixed amount the fund is set to, e.g. 300; Petty Cash in the ledger stays at this figure
`Vouchers`	Receipts for each payout, coded to an expense account
`Cash Over and Short`	Expense account for small unexplained differences (debit for short, credit for over)

Examples

Fund 300; cash counted 64; vouchers: postage 120, office supplies 96, taxi 20 (total 236)

Result: 64 + 236 = 300, no shortage. Replenish: Dr Postage 120 / Dr Office Supplies 96 / Dr Travel 20 / Cr Cash 236.

Fund 300; cash counted 58; vouchers total 236

Result: 58 + 236 = 294; short 6. Replenish: Dr Postage 120 / Dr Office Supplies 96 / Dr Travel 20 / Dr Cash Over and Short 6 / Cr Cash 242.

Fund increased from 300 to 500

Result: Dr Petty Cash 200 / Cr Cash 200. This is the only time Petty Cash itself is debited after setup.

Common mistakes

Debiting Petty Cash when replenishing: the expenses are debited; Petty Cash stays at the imprest amount.
Replenishing without reconciling first: shortages go unnoticed and expenses are posted late.
Accepting IOUs as vouchers: an IOU is a receivable from the employee, not an expense.

Practice Petty cash reconciliation

These drills check your answer on live data, free, no account needed.

Retail month-endClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
Bakery year-endClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.

Questions

What is the entry to set up petty cash?

Dr Petty Cash / Cr Cash for the fund amount, once. Afterwards only replenishments and changes to the fund size are posted.

How often should petty cash be reconciled?

At every replenishment and at month-end, plus surprise counts by someone other than the custodian.

Month-end close checklistA month-end close checklist in sequence: cutoff, bank and card reconciliations, AR and AP, accruals and prepaids, fixed assets, balance sheet recs, lock.
Reconciliation controlsThe internal controls around reconciliations: the preparer does not handle cash, a reviewer signs off, statements come from the bank, items are aged.
Balance sheet reconciliationA balance sheet reconciliation supports each ledger balance with independent evidence: a bank statement, an aging, a schedule or a roll-forward. Sign-off.