Tag: petty cash book

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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

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

  1. Contra entry

  2. Imprest system

  3. Going concern

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

The imprest system is an accounting method where the petty cash balance is restored to a fixed amount at the start of each period by reimbursing the exact amount spent.

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

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

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When the main cashier advances money to the petty cashier, it is a payment from the main cash book, so it is recorded on the credit side of the main cash 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

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

  1. Salary payments

  2. Stock issued

  3. Subscriptions

  4. Travelling expenses
Reveal answer Fill a bubble to check yourself
D Correct answer
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.

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

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?

  1. Rs. 162.22

  2. Rs. 162.96

  3. Rs. 236.72

  4. Rs. 637.04
Reveal answer Fill a bubble to check yourself
A Correct answer
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 may be used to pay _________.

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

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

Cash book prepared on imprest system is_________.

  1. Two column cash book

  2. Cash book

  3. Petty cash book

  4. Purchase book
Reveal answer Fill a bubble to check yourself
C Correct answer
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.

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 word "Petty" is derived from ______________.

  1. French word

  2. German word

  3. Latin word

  4. Greek word
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Petty is a french word which means small. So petty cash book has come into existence which records small amount transactions. Hence, petty is the derivation of the french word.

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 term "Imprest system" is used in relation to ____________.

  1. Purchase book

  2. Sales book

  3. Cash book

  4. Petty cash book
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Petty cash system is used to pay small day to day expenses on daily basis. A sum of total spent amount is transferred to cash book and expense account for a particular period rather than recording each individual small transaction.

This is also known as imprest account.