Jim Merritt - July 22, 2025

Updated October 23, 2026, to clarify the Imprest Petty Cash System and current QuickBooks® procedures.

Managing small, everyday business expenses doesn't have to be complicated. Office supplies, parking fees, postage, and other minor purchases can be handled efficiently with a properly maintained Petty Cash account.

At QuickTrainer, I recommend using the Imprest Petty Cash System, a simple method that maintains a fixed petty cash balance while providing accountability for every dollar spent.

Let's walk through how to establish and maintain this system using QuickBooks® Online (QBO) or QuickBooks® Desktop (QBDT).

What Is the Imprest Petty Cash System?

Under the Imprest System, a business establishes a fixed amount of petty cash—let's say $200.

As cash is spent, receipts are collected and placed in the petty cash box or envelope.

At any given time:

Cash Remaining + Expense Receipts = Established Petty Cash Fund

When it's time to replenish the fund, the receipts are recorded as expenses in QuickBooks®, and enough cash is withdrawn from the checking account to restore the original $200.

Here's the important distinction:

The Petty Cash General Ledger account always maintains its original $200 balance unless you intentionally increase or decrease the size of the fund.

Step 1: Create a Petty Cash Account in QuickBooks®

QuickBooks® Online:

1. Go to Settings ⚙️ → Chart of Accounts.

2. Click New.

3. Select Bank as the Account Type.

4. Select Cash on hand as the Detail Type.

5. Enter Petty Cash as the Account Name.

6. Click Save.

Depending on your QBO interface, some menu labels may differ.

QuickBooks® Desktop:

1. Go to Lists → Chart of Accounts.

2. Select Account → New.

3. Choose Bank as the Account Type.

4. Enter Petty Cash as the Account Name.

5. Click Save & Close.

Step 2: Establish Your Petty Cash Fund

Let's assume you've decided to maintain a $200 petty cash fund.

Write a $200 check from your business checking account, payable to Cash.

In QuickBooks®, record the check using Petty Cash as the category account, rather than an expense account.

Cash the check and place the $200 in your petty cash box.

Your accounting records will now reflect:

• Checking Account: Decreased by $200.

• Petty Cash Account: Increased by $200.

Remember, establishing your petty cash fund is not an expense. You're simply moving money from one asset account to another.

Step 3: Track Petty Cash Spending

Whenever someone uses petty cash, make sure they provide a receipt documenting the purchase.

Place the receipt in the petty cash box or envelope.

Suppose the following purchases occur:

You should now have:

• Cash remaining: $30

• Receipts totaling: $170

• Total accounted for: $200

Everything balances!

If someone forgets to obtain a receipt, prepare a written voucher identifying the vendor, date, amount, and business purpose. Keep it with your other receipts and obtain additional supporting documentation when necessary.

Important: Under the Imprest System, you do not record each individual petty cash expense in QuickBooks® when the money is spent. You'll record the expenses when you replenish the fund.

Step 4: Replenish Your Petty Cash Fund

Once the cash runs low, it's time to replenish the fund.

First, remove the receipts and verify that their total, combined with the remaining cash, equals your established $200 fund.

Next, open QuickBooks® and create a check from your business checking account.

Follow these steps:

1. Make the check payable to Cash.

2. Enter the date you're replenishing the fund.

3. In the Category section, enter the appropriate G/L expense account for each receipt.

4. Enter a description and the amount of each expense.

5. Assign a Class, if your company uses Class tracking.

6. Continue until all receipts have been entered.

7. Verify that the total check amount equals the amount needed to replenish petty cash.

Using our example, the check will total $170.

Cash the check and place the $170 in your petty cash box.

You now have $200 in physical cash again.

Here's the beauty of the Imprest System:

Your QuickBooks® Petty Cash G/L account continues to show $200. The replenishment check records the $170 in expenses directly against your business checking account.

Do not post the replenishment check to the Petty Cash G/L account. Doing so would incorrectly increase its balance.

For an additional explanation of this accounting method, see Imprest Petty Cash – Double Entry Bookkeeping.

Three Petty Cash Tips I Recommend

1. Keep the fund at a fixed amount. The only routine reason to post another transaction directly to the Petty Cash G/L account is to intentionally increase or decrease the established fund amount.

2. Assign responsibility. Designate one employee to maintain the petty cash box, collect receipts, and account for all disbursements.

3. Reconcile before replenishing. Make sure your physical cash plus receipts equals the established fund balance. Investigate shortages or overages rather than ignoring them.

One additional recommendation: Replenish and record outstanding receipts before closing an accounting period, even if the fund isn't running low. This helps ensure expenses are recorded in the proper period.

Need Help Managing Petty Cash in QuickBooks®?

The Imprest Petty Cash System is straightforward, but understanding how the transactions affect your General Ledger is important.

QuickTrainer provides Setup Services for QuickBooks® Users and personalized One-on-One Training for QuickBooks Users to help you establish and maintain proper accounting procedures.

QuickTrainer is located in Wilmington, NC and works remotely with businesses throughout the United States.

📞 Call QuickTrainer at 910-338-0488

📧 Email: [email protected]

🌐 Website: www.qti-wilmington.com

Let QuickTrainer give you back your time.

QuickTrainer, Inc. is an independent QuickBooks® consulting and training company and is not affiliated with or employed by Intuit Inc. Intuit and QuickBooks® are trademarks and/or service marks of Intuit Inc.