Petty Cash Fund

Question 1

Accounting Standards:

Answer 1

PAS 1 (Presentation of Financial Statements) and PAS 7 (Statement of Cash Flows).

Question 2

Scope of the Applicable Standard:
The scope for handling petty cash funds typically includes:

Answer 2

Establishing and maintaining a petty cash system.
- Recording and reconciling petty cash transactions.
- Internal controls to manage and safeguard the petty cash fund.

Question 3

A small amount of cash kept on hand to cover minor expenses that do not warrant writing a check or using a company credit card.

Answer 3

Petty cash fund

Question 4

A system where a fixed amount of cash is set aside, and replenishments are made to restore the balance to this fixed amount.

Answer 4

Imprest system

Question 5

Recognition: Initial and Subsequent

Answer 5

• Initial Recognition: When the petty cash fund is established, it is recognized by transferring cash from the main bank account to the petty cash fund.
• Subsequent Recognition: Expenses paid out from the petty cash fund are recorded, and the fund is replenished as needed.

Question 6

Measurement: Initial and Subsequent

Answer 6

• Initial Measurement: nominal value.
• Subsequent Measurement: nominal value

Question 7

Journal Entries:

Answer 7

• Initial Setup of Petty Cash Fund:
  Dr. Petty Cash Fund
  Cr. Cash/Bank
• Recording Expenses Paid from Petty Cash:
  Dr. Various Expense Accounts (e.g., Office Supplies, Travel)
  Cr. Petty Cash Fund
• Replenishing the Petty Cash Fund:
  Dr. Petty Cash Fund
  Cr. Cash/Bank

Question 8

Presentation:

Answer 8

Petty cash funds are presented under current assets in the balance sheet, typically as part of cash and cash equivalents or listed separately if the amount is significant.

Question 9

Disclosure:

Answer 9

Disclosures related to petty cash funds should include:
- The accounting policies for petty cash management.
- The total amount designated for petty cash.
- Details of any significant changes in the petty cash fund during the reporting period.
- Any restrictions on the use of the petty cash fund.