Petty Cash Book refers to a separate cash book maintained by a petty cashier to record small, repetitive payments such as conveyance, cartage, postage, telegrams, and other miscellaneous expenses. In large organisations, if all these small payments are recorded in the main cash book, it becomes cumbersome and bulky. To avoid this, a petty cashier is appointed to handle such transactions.

Advantages of Maintaining Petty Cash Book:

1. Saving of Time and Efforts of Chief Cashier: The chief cashier is not required to deal with petty disbursements. He can concentrate on cash transactions involving large amounts of cash. This saves time and labour and helps the chief cashier to discharge his duties more effectively.

2. Effective Control over Cash Disbursements: Cash control becomes easy because of division of work. The head cashier can control big payments directly and petty payments by keeping a proper check on the petty cashier. This makes chances of frauds and embezzlements very difficult.

3. Convenient Recording: Recording of petty disbursements in the main cash book makes it bulky and unmanageable. As per the materiality principle, insignificant details need not be given in the main cash book. The cash book thus reveals only material and useful information.

4. Easy Posting to Ledger: Recording of small payments becomes easy as totals of different types of expenses are posted to the ledger. It saves time and effort of posting individual items. In nutshell, it is a cost reduction control measure.