Learn how to settle a petty cash or purchase custody

Today we will see a type of financial accounting, which is custody

 It is in most or all companies and it is in the accounting guide as part of other debit balances, meaning within the current assets

Let the other debit stocks code be 15

The main account of the custody is 1505

And there are sub accounts for each custody

Mahmoud Ibrahim custody 150 501

Mr. Armed essayed custody 150502

Thus, this is the account of each custody separately (the assistant professor) So that we know to work on it

The idea of the petty cash testament or the petty cash register.

The idea is simple, where the company has purchasing representatives who buy, for example, spare parts and simple things related to production, or, for example, a custody for the person responsible of the cars movement. Or custody for every member inside the company who is responsible of completing the company transactions and interests at the government agencies must have with him a custody to be able to disburse Then he brings the invoices for the value of what was spent to be settled.

Types of custody of petty cash or purchases

* Temporary custody and we do it once or several times and will be renewed as needed (the custody of official administrative affairs redeem papers in government agencies)

* Permanent custody - it is restored and automatically renewed continuously

The permanent custody is usually a (maintenance custody - custody of spare parts purchases - custody of the official in charge of maintenance movement, etc.)

In principle, we must know that everyone will have custody

The administration determines the amount of the custody according to its vision and the sort of use the custody

It means we can give someone custody of 5 thousand - another person 10 thousand and so on
 

Accountant role from petty cash custody or procurement custody

The first thing we will assume is that Mahmoud Ibrahim took custody of 5,000 and Mahmoud Ibrahim is the company’s Responsible for moving cars, especially for car maintenance and spare parts

 As we said, he has custody of 5,000 thousand

He brought with him invoices of 4,500 pounds

First thing we need to start reviewing the invoices in custody by collecting numbers in it

And if the tax is registered with the tax authority, the value of withholding tax and collection shall be deducted from the invoice

If the invoice is more than 300 EGP (discount rate 1% supplies & 3 services & 5% Self-employed

The discount will be on the invoice value after the discount, if any, and before the value-added tax

We review the invoice form in terms of:

The seller's name

Invoice number -

Address - Telephone

 Commercial Registration No

 Tax file number

Value added tax)) and the VAT registration number

And supplier signatures, etc...

This is the first thing in reviewing bills

The second thing: we begin to review the documentary cycle of purchase, whether it is spare parts, auxiliary materials, machine maintenance bills, spare parts and car maintenance

In principle, we must know that the issue differs from another company According to the powers conferred on persons

This means, for example, it is possible to find in a company the custodian who does not bring price quote, and this is with the approval of the general manager.

In another company, it is necessary to bring more than a price quote, for example, in a company. The invoice is required to be signed by more than one person, especially if the amount is relatively large.

The idea is that every place according to its policy and according to its nature and according to the tools and conditions available has accounts management. Talking about the practical reality

So you check the invoices well. And additional signatures, receipts and permissions

Then you start making the custody settlement and replace it with the value of the bills that he brought after signing it, of course from the officials in the financial department according to each company
 

Example of petty cash and purchasing custody

I have a person named Hatem and he is a special purchasing representative for small purchases of simple spare parts that the factory needs, what the buffet, and the office supplies need, or anything else related to the company

We will have an account called "Petty Custody."

And we open a sub-account in the name of Mr. Hatem

Hatem works and spends custody for the first time. We spent 5,000 for example. Mr.

The entry will be as follow:

5,000 Account / petty custody,

To Hatem

Bank / 5,000

Mr. Hatem came and brought with him a settlement statement and brought with him the invoice of some spare parts, some things for the buffet and a few notebooks and paper boxes for the administration

 The entry is

3,000 accounts / spare parts store

500 Accounts / general and administrative expenses buffet

900 Account / administrative expenses office supplies

To

4,400 Accounts / petty custody.

 Hatem still has 600 left

So we are renewing the custody again for a value of 4400

The entry will be as follow

4,400 account / custody ********

To

4,400 Account / Treasury – Bank

Of course, we opened an account for him and we know how much money he is supposed to have

Liquidation of custody during budget review

 The whole idea means that we know the direction of the money that he is spending if he spent it for administrative needs or bought needs related to the sales department or production supplies or paid an electricity bill with it, so it is an industrial expense, for example, in the sense of directing the money according to its purpose

Of course, if there was a purchase of spare parts supplies, Auditing will start and see if there are price offers. Mostly, in practical terms, there is no supply order because it is from small places

Auditing the purchase order with the purchased quantity, the approved signatures of people and the other expenses, according to the disbursement cycle and the authorization of the purchase, and according to the financial accounting principles imposed at the end of the fiscal period of the year, if possible

 Then the custody with its owners is liquidated and renewed in the following periods, especially in the year-end budget if possible.

Of course, while you are auditing the custody, you see the amounts paid in the bills corresponding to the same values of the amounts that were paid for similar bills in a previous era, and there is no difference, even if there is a difference, the custody official returns and inquiries from him about the reason

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