Accounting chapter 5 (Petty Cash)

Question 1

Define petty cashbook

Answer 1

A petty cashbook is used to record low-value cash payments like postages, cleaning, travelling expense, etc

Question 2

Advantages of petty cashbook

Answer 2

.Number of entries in the main book is reduced
.The main cashiers burden is reduced
.The chances of mistakes in recording is minimized, such as overlooked transactions
.Posting becomes easier with the total’s analysis columns

Question 3

Define the imprest system

Answer 3

The imprest system of petty cash is where the amount used each period is restores, so that petty cashier starts each month with the same amount.

Question 3

Define the imprest system

Answer 3

The imprest system of petty` cash is where the amount used each period is restores, so that petty cashier starts each month with the same amount.

Question 4

Define imprest amount

Answer 4

The amount that is restored each period

Question 5

Advantages of imprest system

Answer 5

.Chief cashier will always be aware of how much petty cash was spent each period
.Petty cash expenditure can be controlled
.The amount of imprest can be adjusted depending on the necessity of the business
.The imprest system can also help to reduce fraud