QuickBooks Petty Cash: How to Set Up and Reconcile It

To set up petty cash in QuickBooks Online, go to Settings, Chart of accounts, New, choose the Bank account type, set the Detail type to Cash on hand, name it Petty Cash, and Save. In QuickBooks Desktop, open Lists, Chart of Accounts, click Account, New, pick Bank, and name it Petty Cash. You then fund the box by transferring money from checking, record each cash purchase as an expense paid from Petty Cash, and replenish the fund when it runs low.

Petty cash is just a small cash drawer tracked as its own bank-type account so every dollar in and out is on the books. Set it up as Bank, Cash on hand and the balance shows on your balance sheet as a current asset, sits next to your checking account in reports, and can be reconciled against the receipts in the box whenever you replenish it.

How do I set up a petty cash account in QuickBooks Online?

Select Settings, then Chart of accounts, then New. In the Account type dropdown choose Bank, then set the Detail type to Cash on hand. Name the account Petty Cash and Save. Leave the opening balance blank unless you already have cash on hand, in which case enter that amount with an as-of date. The balance fills in the first time you move money into the fund.

What account type is petty cash in QuickBooks?

Petty cash is a Bank account type. In QuickBooks Online the detail type is Cash on hand. Treating it as a bank account, not an expense account, lets you transfer money in, record purchases out, and reconcile the fund like any other cash account. It then appears on the balance sheet as a current asset grouped with your other cash.

What detail type do I use for petty cash in QuickBooks Online?

Use the Cash on hand detail type under the Bank account type. Cash on hand tells QuickBooks the money is physical currency held on site rather than a checking or savings balance at a bank. The account still behaves like a bank account for transfers and reconciliation, so the detail type is mostly for clean reporting.

Is petty cash a bank account or cash on hand in QuickBooks?

Both. Petty cash uses the Bank account type with the Cash on hand detail type. The Bank type is what makes it work in the Transfer and reconcile screens, while Cash on hand labels it as physical cash. So you pick Bank as the type and Cash on hand as the detail, and QuickBooks treats the drawer as a small bank account.

How do I fund petty cash from my checking account in QuickBooks?

Use a transfer or a check. In QuickBooks Online select + New, then Transfer, set Transfer Funds From to your checking account and Transfer Funds To to Petty Cash, enter the amount, and Save. You can also write a check made out to Cash and post it to the Petty Cash account. Either way the money leaves checking and lands in the petty cash balance.

How do I record expenses paid from petty cash in QuickBooks?

Record each cash purchase as an expense with Petty Cash as the payment account. In QuickBooks Online select + New, then Expense, choose Petty Cash in the payment account field, and categorize the purchase to the right expense account. In Desktop use Write Checks or Enter Bills with the Petty Cash account. This lowers the petty cash balance and books the cost.

How do I replenish petty cash in QuickBooks?

Total the receipts in the box, then refill the fund back to its starting amount. Cash a check made out to Cash for the receipt total and record it as a transfer from checking into Petty Cash. If you booked the individual expenses already, the refill is just a transfer. If you didn't, the replenishment check itself carries the expense categories for the receipts it covers.

What is the journal entry for petty cash?

To fund it, debit Petty Cash and credit your checking account. To record spending at replenishment, debit each expense account shown on the receipts and credit Petty Cash, then debit Petty Cash and credit checking when you refill. Under this imprest method the fund always returns to its fixed starting amount, and the expenses hit the books each time you replenish.

How do I record cash withdrawn from the bank and put into petty cash?

Treat it as a transfer between two of your own accounts, not an expense. In QuickBooks Online use + New, Transfer, from checking to Petty Cash for the amount you withdrew. The cash hasn't been spent yet, it just moved from your bank to your drawer, so a transfer keeps both balances correct without double-counting it as a cost.

How do I set up petty cash in QuickBooks Desktop?

Open Lists, then Chart of Accounts, or press Ctrl+A. Click the Account button at the bottom and choose New. In the account type window select Bank and click Continue. Name the account Petty Cash, optionally enter an opening balance, then Save and Close. Desktop has no detail types, so Bank is all you choose, and the drawer is ready to fund and spend from.

Where does petty cash show on the balance sheet?

Petty cash shows as a current asset, grouped with your bank and cash accounts near the top of the balance sheet. Because it is a Bank, Cash on hand account, QuickBooks reports the running balance the same way it reports checking. A healthy fund equals the cash in the box plus the receipts not yet replenished.

How do I reconcile a petty cash account in QuickBooks?

Count the physical cash in the box, add the value of any receipts not yet recorded, and that total should equal the petty cash balance in QuickBooks. If it doesn't, you have an unrecorded purchase or a missing receipt. Many businesses reconcile petty cash informally at each replenishment rather than against a bank statement, since there is no statement for a cash drawer.

How do I record cash returned to the petty cash box?

If cash comes back into the drawer, record it as money moving into the Petty Cash account. For change returned from a purchase, edit the original expense so it reflects the true amount spent. For a deliberate refill, use a transfer into Petty Cash. The goal is that the QuickBooks balance always matches the actual cash sitting in the box.

Once your cash accounts are set up, the same habits keep your main bank account clean: learn to record a deposit, record bank fees, and match transactions, then reconcile bank statements in QuickBooks each month. When the bank feed won't reach far enough back to balance, you can import old statements by converting them first. If you keep cash and card records in spreadsheets, you can convert statements to Excel, turn a CSV file into a .qbo, or pull the data off your petty cash receipts automatically.