Question 3
- What is petty cash book?
- Explain the imprest system of keeping petty cash book
- State three uses of petty cash book.
Observation
Majority of the candidates attempted this question and the performance was fair.
Some of the suggested answers are:
(a) Petty cash book is a book of original entry which is used for recording small expenses like postage stamps, stationery, transport, cleaning, etc.
OR
Petty cash book is an accounting book used for recording expenses which are small and of little value like postage, stamps, stationery, transport, cleaning, etc.
(b) Imprest system is a method of keeping petty cash book whereby the petty cashier is reimbursed for the amount spent from the cash float for a specified period thus, bringing it to the original amount.
(c) Petty cash book is used to:
(i) record the numerous minor expenses incurred daily in the various offices;
(ii) relieve the main cashier of frequent interruption on his duties;
(iii) control the sum of money spent as it is kept on imprest system;
(iv) reduce the number of entries to be made in the ledger accounts by the
cashier as the columnar totals are posted instead of individual entries;
(v) summarize petty expenses;
(vi) compare petty expenses between periods;