Bookkeeping 38

Question 1

1. p. 93. PETTY CASH. How do you establish a PETTY CASH ACCOUNT?

Answer 1

Set aside a certain sum, say $100, with the money kept in some place with ONE person being responsible for it.

Question 2

2. What is the bookkeeping entry when the CASH IS DRAWN?

Answer 2

NO BOOKKEEPING ENTRY IS NEEDED WHEN THE CASH IS DRAWN, SINCE THE PETTY CASH FUND TOGETHER WITH THE CASH IN BANK ACCOUNTS EQUAL THE CASH OWNED BY THE BUSINESS.

Question 3

3. What is an IMPREST FUND?

Answer 3

a PETTY CASH FUND in the form of currency or coin that has been advanced as FUNDS HELD OUTSIDE THE TREASURY.

Question 4

4. The base characteristic of an IMPREST SYSTEM is:

Answer 4

that a FIXED amount is reserved, which, when money is spent, will be replenished.

Question 5

5. Where will the replenishment to the PETTY CASH FUND come from?

Answer 5

from another account source, such as a check drawn on a bank account.

Question 6

6. Why use an IMPREST SYSTEM for PETTY CASH?

Answer 6

because it allows only the replenishment of the cash spent.

Question 7

7. What is the ENTRY for the REPLENISHMENT of the PETTY CASH FUND?

Answer 7

The credit will be to the PRIMARY CASH ACCOUNT, usually a Checking Account. The DEBITS will go to the respective expense accounts, based on the PETTY CASH RECEIPT DOCKETS.

Question 8

8. The IMPREST SYSTEM ensures that:

Answer 8

you must document how the petty cash is spent.

Question 9

9. How do you document how the Petty Cash is spent?

Answer 9

Petty cash receipts MUST BE WRITTEN for each amount issued OUT of petty cash. When all the receipts are totaled and deducted from the opening PETTY CASH FLOAT, the calculated value must agree with what is left int he PETTY CASH FLOAT.

Question 10

10. Under the IMPREST SYSTEM, how is the replenishment calculated?

Answer 10

Only that which is recorded as spent is replenished. Any shortfalls may have to be replenished by the GUARDIAN of the fund.