We suggest you try to answer each question yourself before clicking on the see answer button. Under this system the petty cashier at first receives from the chief cashier a fixed sum of. Read this article to learn about the recording of transactions in cash book and journal. Receipts are recorded on the debit the left hand side, and payments are recorded on the credit right hand side. Meaning of petty cash book, its importance and advantages. The following financial accounting mcqs are collected from different past papers and from accounting mcqs bank. Accounting can be done manually or made easier with bookkeeping software and employee expense. Usually the deposits into bank accounts maintained by a business firm, withdrawals from such accounts and cheque payments are also recorded in the cash book. If you find difficulty in answering these questions, read cash book chapter thoroughly from explanation section of the website. Petty cash is a small amount of cash that a business has on. They must have taken into account the massive savings that businesses will make not having to buy a new petty cash book every few years. The petty cash book is for dealing with small items of money. Besides maintaining a main or general cash book, many companies also maintain a small cash book known as petty cash book to record small day to day expenditures of the business. There are two primary types of entries in the petty cash book, which are a debit to record cash received.
The petty cash book, something that has worked effectively for years for millions of businesses, will be no more under mtd. Cash book short questions and answers play accounting. Recording of transactions ii petty cash book solutions. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel. Check out our video on petty cash book for accounts. The petty cash book is a formal summarization of petty cash expenditures, sorted by date. Types of petty cash book in accounting with diagrams and examples small or large companies maintain 2 types of petty cash book for all cash transactions of a business. A level accounts module 1 cashbooks and petty cashbooks the student room.
Petty cash book is a type of cash book, which use to record small amount of receipts and payment. Also included as a part of cash are the balances kept at banking and financial institutions. Petty cash book is an accounting book used for recording expenses which are small and of little value, for example, stamps, postage and handling, stationery, carriage, daily wages, etc these are expenses which are incurred day after day. Thus, the book in which small payments, which are not convenient to record in the main cash book, like postage, traveling expenses, purchase of stationery etc. The cash book is a chronological record of the receipts and payments transactions for a business.
Petty cash is also the title of the general ledger current asset account that reports the amount of the companys petty cash. Petty cash book is the accounting book that is used for the purpose of recording the petty cash expenditure i. Thus, the book is part of a manual recordkeeping system. A petty cash book is generally maintained on a columnar basis a separate column being allotted for each type of expenditure. If youre looking for solutions to other theoretical questions or other book related numerical questions solutions, you can find them at. It should also be kept in mind that petty cash book is not like the cash book. Cash book records all receipts of and payments in cash. The petty cash book is a recordation of petty cash expenditures, sorted by date. Below you will find all the cambridge international examinations igcse accounts 0452 past paper questions categorized into topics.
The advantages of the imprest system are as follows. This book is called the petty cash book since it takes care of the cash transaction which are very petty in nature. It is to be noted that the amount of cash in the hands of the petty cashier is a part of the cash balance, therefore it should be included in the cash balance when the latter is shown in the trial balance and the balance sheet. The reason for replenishing the fund at the end of the accounting period is that no record of the fund expenditures is in the accounts until the check is written and a journal entry is made. The days of the petty cash book are doomed accountingweb.
It is easy to set up and will save you from writing a lot of small checks or using your personal funds. I hope you enjoy this online lecture on introduction to petty cash book by letstute. A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Some firms actually keep a separate cashbook and a petty cash book.
This page contains solutions to simple cash book numerical questions for the chapter 4 recording of transactions ii. Petty cash book format example definition explanation. Petty cash book can be maintained either in a simple or in analytical way. Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs. Since the petty cash book analysis the expenses into a number of heads of expenses, the name given to it is analytical petty cash book. Accounting entries in the cash book are then placed into the general ledger account. These mcqs are very helpful for the preparation of various posts of senior auditor, junior auditor, accountant and for cost accountant. Petty cash book definition the petty cash book is defined as relatively small amount of cash kept at hand for making quick payments for miscellaneous small expenses in the business concern. Cash book contains cash transactions passing into and out of a business.
Totals are carried forward from page to page until the end of the periods. Keep petty cash purchases small, for expenses like postage, parking meters or party supplies. Petty cashier is not allowed to keep idle cash with him if the float is found to be more than adequate. In fact, it is an extension of simple petty cash book. Cash book is a subsidiary book which records the receipts and payment of cash.
Besides maintaining a main or general cash book, many companies also maintain a small cash book known as petty cash book to record small day to day expenditures of the business petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel, newspapers, cleaning, pins, and causal labor etc. The site helps you in effective accounting of small receipts and expenses in a single report. Do not leave it in a common area, such as the lunchroom or meeting area. She keeps the cash book herself but her accountant writes up her ledger each month. With the help of cash book cash and bank balance can be checked at my point of time. Pay for an authorized item with your own cash and bring a. Petty cash book can be expressed as a formal summarization of the petty cash expenditures which refers to the daytoday normal. Companies replenish the petty cash fund at the end of the accounting period, or sooner if it becomes low. It is a simple website designed solely to assist you in knowing. However, there is a fine line of difference between cash book and cash account, which weve elaborated in the given article. So when the cash level reaches a minimum level more cash is added and thus this book keeps on working. Sohara puts her cash receipts in a till and enters them into her threecolumn cash book each week.
The is only one money column on the debit side and all sum received from time to time by the petty cashier from the chief cashier are entered in it. Cash includes currency and coins, although most businesses do not keep much of this type of cash around. In this case the ledger has the various heads under which the usual amount is spent. How to set up and maintain a petty cash account basic. There are two primary types of entries in the petty cash book, wh. She offers a cash discount of 3% to her debtors for payment within 15 days. The additional analysis columns are used to analyze expenditures as they arise. Learning management system subject name financial accounting 1 week 9 topic 3 column cash book and petty cash name. Two types of petty cash book maintained by small or large companies for easy, quick and accurate recording of all cash transactions. When initially opening the petty cash fund, cash is simply transferred from one asset account to another with no effect on the balance of the organizations assets.
This reduces the chances of misuse of cash by the petty cashier. As an employee, a common way to get funds from petty cash is to. In most cases, the petty cash book is an actual ledger book, rather than a computer record. The total amount column is balanced and individual. Recording of transaction in cash book and journal with. Petty cash accounting involves establishing a petty cash policy, setting up a petty cash log, creating journal entries, and reconciling the petty cash account. Petty cash, also known as imprest cash, is a fund established for making small payments that are impractical to pay by check. The petty cash book is ruled in the form of the single column cash book with an amount column and addition oat columns for the more usual classes of expenditure. Thus we see that a cash book is the mixture of journal and ledger. For this reason in such businesses, the petty cash book is maintained in columnar or analytical form, with a separate column for each usual item of expense and a column for total. A petty cash account is simply money kept on hand to pay for minor cash items such as stamps, office supplies, tips, parking tolls, etc. Keep the petty cash book and box or tin in a safe place, such as the accountants or managers office or cubicle.
Examples include postage due, reimbursement to employees for small purchases of office supplies, and numerous similar items. The cash book is updated from original accounting source documents, and is therefore a book of prime entry and as such, can be classified as a special journal unlike other special journals such as the purchases journal or the sales journal, the cash ledger book records debit and credit entries. Meaning of petty cash book a petty cash book is one in which all petty or small payments made through petty cash fund are recorded systematically. Read this article to learn about the meaning and preparation of analytical and imprest system of petty cash book. Each payment is recorded on it twice, one on total amount column and next on individual expense column. Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check.
The larger firms generally divide the cash book into 2 parts. This type of petty cash book is known as analytical petty cash book. Thus, the book in which small payments, which are not convenient to record in the. Examples of these payments are office supplies, cards, flowers, and so forth. Petty cash book accounting letstute accountancy youtube. Cash book is periodically made up with the bank instructions as an internal method of inspecting. In large business concerns, the petty cash book is maintained in columnar or analytical form, with a separate column for each usual item of expense and a column for. The credit side consists of several analysis columns. Cash and petty cash accounts are both asset accounts. Many accounting students, utter confusion in understanding the two, in fact, they juxtapose them. A cash book is a type of subsidiary book where cash or bank receipts and cash or bank payments made during a period are recorded in a chronological order. Uses of petty cash book its a cash book used to enter daily petty expenses like cost of stationery, postage and xerox copy and so on. General cash book is subdivided in the single column, double column, and treble column cash book. These notes are aimed at people studying for aqa a level accounting unit 1, but will also be suitable.