Tag: recording and posting of cash transactions

Questions Related to recording and posting of cash transactions

Petty Cash Book may be treated as a ___________________.

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. Part of the double entry system

  2. Merely as a memoranda book

  3. Either (A) or (B)

  4. None of the above

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Correct Option: C

Which of the following statement is false?
The petty cash book  ____________. 

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. is a book of prime entry

  2. records cheques paid and received

  3. is written up using petty cash receipts and petty cash vouchers

  4. records cash received and paid

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Correct Option: B

Petty cash fund is supposed to be replenished at ________________. 

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. Every day

  2. Every half year

  3. Every Year

  4. At the end of every accounting period

Show answer
Correct Option: D
Explanation:

Petty cash fund is supposed to be replenished at the end of every accounting period.

This is done whenever the amount of actual cash in the petty cash box is low and at the end of each accounting period.

Debiting the petty cash book with the exact amount spent in the previous period is an example of _______________.

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. Contra entry

  2. Imprest system

  3. Going concern

  4. Prudence

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Correct Option: B

When Petty Cash is advanced to the Petty Cashier, the main cashier will record it on the debit side of Cash Book.

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. True

  2. False

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Correct Option: B

Which of the following transactions should be entered in petty cash book?

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. Salary payments

  2. Stock issued

  3. Subscriptions

  4. Travelling expenses

Show answer
Correct Option: D
Explanation:

The petty cash book is a formal summarization of petty cash expenditures, sorted by date. In most cases, the petty cash book is an actual ledger book, rather than a computer record.

Petty cash book is considered as memorandum book.

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. True

  2. False

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Correct Option: A

There has been a break-in at your office and money has been stolen from the petty cash tin, which now contains only 37 rupees in coins. There are petty cash vouchers in the tin for the month to date totaling Rs.237.4. The petty cash book shows that at the start of the month, there was a balance of Rs.74.50 in petty cash, and that on the first day of the month the petty cash balance was increased to Rs.400, under an imprest system. How much money has been stolen from petty cash?

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. Rs. 162.22

  2. Rs. 162.96

  3. Rs. 236.72

  4. Rs. 637.04

Show answer
Correct Option: A

Petty cash may be used to pay _________.

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. The expenses relating to postage and conveyance

  2. Salaries and wages to the final staff

  3. For the purchase of furniture and fittings

  4. Other recurring expenses

Show answer
Correct Option: A
Explanation:

There are two kinds of cash book i.e. Main Cash Book and Petty Cash Book. Petty cash book is used to record small value expense items.

 A petty cash fund is a small amount of cash kept on hand to pay for minor expenses, such as office supplies or reimbursements. A petty cash fund will undergo periodic reconciliations, with transactions also recorded on the financial statements.

Cash book prepared on imprest system is_________.

elements of book keeping and accountancy recording and posting of cash transactions understand the concept of imprest system petty cash book bank book and petty cash book

  1. Two column cash book

  2. Cash book

  3. Petty cash book

  4. Purchase book

Show answer
Correct Option: C
Explanation:

A large number of small payments are recorded in separate cash book such a cash book is maintained by petty cashier is called as petty cash book. The petty cashier works on the "Imprest system" under this system a definite amount is given to petty cashier at the beginning of certain period. This amount is called "Imprest amount". The petty cashier makes small payments out of this imprest amount, when he spent substantial amount he gets reimbursement of amount spent from head cashier.