Tag: petty cash book

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Multiple choice commercial studies subsidiary books - 2 petty cash book meaning, importance and components of voucher bank book and petty cash book

When using a petty cash system, the replenishment of the fund would normally include a debit to _______________.

  1. Cash.

  2. Petty Cash.

  3. Revenues.

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Replenishment involves the main cashier giving cash to the petty cashier. The entry involves debiting the Petty Cash account (to increase it) and crediting the main Cash account.

Multiple choice commercial studies subsidiary books - 2 petty cash book meaning, importance and components of voucher bank book and petty cash book

Payments in cash of small amounts like travelling expenses, postage, carriage,etc. are recorded in the ______________.

  1. Main Cash Book

  2. Petty Cash Book

  3. Cash Budget

  4. Journal proper
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Small, frequent payments are handled through the petty cash system to keep the main cash book uncluttered and to delegate minor financial responsibilities.

Multiple choice elements of accounts cash book and its types petty cash book meaning, importance and components of voucher bank book and petty cash book

Perpetual inventory system involves ____________.

  1. bincard and stores ledger

  2. bill of material and material requisition

  3. purchase requisition and purchase order

  4. inward and outward invoices
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A perpetual inventory system maintains continuous records of inventory levels. This is achieved by tracking every receipt and issue of stock using documents like bincards and stores ledgers.

Multiple choice 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

The amount paid to the petty cashier at the beginning of a period is known as __________ amount.

  1. Imprest

  2. Credit

  3. Idle

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Imprest - It is a fund used by a business for small items of expenditure, and restored to a fixed amount periodically.
Hence, a petty cash book is kept on the imprest amount.
Multiple choice 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

Which of the following statements is/are true ? 
(i) Cash book records all cash receipts and cash payments
(ii) Cash book records all sale and purchase transactions of goods both in cash and on credit.
(iii) Cash book records discount on cash payments
Select the correct answer from the options given below :-

  1. Only (i) of the above

  2. Only (ii) of the above

  3. Only (iii) of the above

  4. Both (i) and (iii) of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A cash book records all cash receipts and payments (i). It does not record credit transactions (ii). It records cash discounts, but usually in a separate column, not as a general rule for all cash payments (iii). Thus (i) and (iii) are generally accepted in accounting contexts.

Multiple choice 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

Petty Cash Book may be treated as a ___________________.

  1. Part of the double entry system

  2. Merely as a memoranda book

  3. Either (A) or (B)

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A petty cash book can be viewed as a memorandum record for small expenses or as part of the formal double-entry system depending on the organization's accounting policy.

Multiple choice 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

Which of the following statement is false?
The 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
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The petty cash book is used for small cash payments. It does not record cheques, which are handled in the main cash book or bank book.

Multiple choice 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

Petty cash fund is supposed to be replenished at ________________. 

  1. Every day

  2. Every half year

  3. Every Year

  4. At the end of every accounting period
Reveal answer Fill a bubble to check yourself
D Correct answer
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.