Chapter 11 Accounting for petty cash

Question 1

Why do most businesses need petty cash?

Answer 1

For the purchase of low-value items and reimbursement of employees for business expenses

Question 2

In the cash book would the receipts be recorded on the debit or credit side?

Answer 2

Debit

Question 3

In the petty cash book would the purchases be recorded on the credit or debit side?

Answer 3

Credit

Question 4

The petty cash book is part of which ledger?

Answer 4

Usually General

Question 5

Is the petty cash book, a book of prime entry?

Answer 5

Yes

Question 6

What happens if the petty cash book is just a book of prime entry and not part of the double entry system?

Answer 6

the receipts into the petty cash box, and total payments made will recorded in a separate petty cash account, kept in the general ledger.

Question 7

If the petty cash book is just a book of prime entry (not double entry), how are the VAT and analysis amounts posted?

Answer 7

Same as usual