Tag: understand the concept of imprest system

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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

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.

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