Chapter 10 - Petty Cash Book

Question 1

What is the Petty Cash Book?

Answer 1

A cash book used to record low-value cash payments for purchases and expenses.

Question 2

What 5 things does the petty cashier do with the petty cash book?

Answer 2

• Receives the petty cash float i.e. petty cash float
• Responsible for security of the petty cash
• Makes cash payments against authorised PC vouchers
• Records the payments made and analyses them to expenses columns in the petty cash book
• Receives and records any small amounts of income

Question 3

What is the Imprest System and how does it work?

Answer 3

The petty cashier starts each week (or month) with a certain amount of money, known as the Imprest Amount.

As payments are made during the week, the money will reduce. The cash will be made up by a payment from bank account at the END of the period.

This will restore the Imprest amount.

Question 4

How do you calculate purchase price before the VAT is added on?

Answer 4

Amount Paid X 100 / 100 + VAT Rate

Price before VAT is added on

Question 5

What are the accounting entries for the payment of an expense?

Answer 5

Debit

Question 6

What are the accounting entries for the payment to a supplier?

Answer 6

DEBIT

Purchase LEDGER CONTROL account - (GENERAL LEDGER)

TRADE PAYABLES’ subsidiary account - (PURCHASES LEDGER)

Question 7

In accounting systems the petty cash book is:

2 Points

Answer 7

• The book of prime entry for low-value cash payments and the double-entry account for petty cash (GENERAL LEDGER)
• Only a book of prime entry , with a SEPERATE petty cash account, which is kept in GENERAL LEDGER in order to complete double-entry bookkeeping.

Question 8

What are the 3 documents in the involved flow for petty cash payments in the accounting system?

What are some examples of each?

Answer 8

• Financial Documents - PC Vouchers and Expense payments
• BOPE - PCB
• Double Entry Bookkeeping - PCB

DEBIT - VAT and Expense CREDIT - PCB payments

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