Accounting Petty Cash Book Quiz

What is the purpose of a petty cash book in accounting?

• To record large, one-time expenses paid for in cash.

• To track credit card transactions.

• To record expenses paid for with a check.

• To record small, everyday expenses paid for in cash.

Explain the importance of maintaining a petty cash book in a business.

• To make it easier to embezzle money from the business

• To avoid paying taxes on small expenses

• To track small cash expenses and ensure transparency and accountability.

• To use as a personal slush fund for the business owner

What are the typical entries made in a petty cash book?

• Date, category of expenses, amount received, and total sales

• Date, details of expenses, amount spent, and balance of petty cash

• Time, description of expenses, amount spent, and balance of savings account

• Month, details of income, amount spent, and balance of checking account

Describe the process of recording expenses in a petty cash book.

• Expenses are recorded by entering the details of each expenditure in the petty cash book, along with the amount and purpose of the expense.

• Expenses are recorded without specifying the purpose

• Expenses are recorded in a separate ledger

• Expenses are not recorded in the petty cash book

How is the reconciliation of a petty cash book carried out?

• By comparing the total amount of cash in the petty cash box with the total amount of cash recorded in the petty cash book, and adjusting for any discrepancies.

• By ignoring the total amount of cash in the petty cash box and only focusing on the total amount of cash recorded in the petty cash book

• By not adjusting for any discrepancies between the total amount of cash in the petty cash box and the total amount of cash recorded in the petty cash book

• By comparing the total amount of cash in the petty cash box with the total amount of cash recorded in the sales book instead of the petty cash book

Explain the steps involved in reconciling a petty cash book with actual cash on hand.

• Asking the employees to contribute additional cash to the petty cash fund

• Comparing the total amount recorded in the petty cash book with the physical cash on hand and making adjustments for any discrepancies.

• Checking the balance of the company's main bank account

• Counting the total number of employees in the company

What is the imprest system in petty cash?

• A method of keeping track of large cash transactions

• A method of controlling and maintaining a fixed amount of cash for small, routine expenses.

• A method of recording long-term investments

• A method of managing employee salaries

Discuss the concept of the imprest system and its significance in managing petty cash.

• The imprest system is a method of managing petty cash by maintaining a fixed amount of cash in a separate fund, and replenishing it to the original amount after a certain period of time.

• The imprest system is a method of managing petty cash by allowing employees to take as much cash as they need without any record keeping

• The imprest system is a method of managing petty cash by replenishing the fund only when it is completely empty

• The imprest system is a method of managing petty cash by keeping the cash in the same fund as other company funds

How are expenses recorded in a petty cash book?

• Expenses are recorded by entering the amount spent without the purpose of the expense

• Expenses are recorded by entering the details of each expense without the amount spent

• Expenses are recorded by not entering any details, just the amount spent

• Expenses are recorded by entering the details of each expense along with the amount spent and the purpose of the expense.

Outline the procedure for recording various expenses in a petty cash book.

• Creating separate columns for each type of expense, entering date, amount, and description, totaling columns at the end of the accounting period, and replenishing the petty cash fund as needed.

• Using the same column for all types of expenses

• Replenishing the petty cash fund at the beginning of the accounting period

• Not entering the date and description of the expenses