Petty Cash Book on Imprest System: Maintenance MCQs Quiz | Class 9
This MCQ quiz for Class IX Elements of Book-Keeping & Accountancy (Code 254) focuses on Unit 6: Recording and Posting of Cash Transactions. The specific topic is the Petty Cash Book on Imprest System. This quiz covers key concepts such as recording petty expenses, the process of balancing the book, and the replenishment procedure under the imprest system. Attempt all questions and click ‘Submit Quiz’ to see your score and download a PDF of your answers.
Understanding the Petty Cash Book on Imprest System
A Petty Cash Book is a type of cash book maintained for recording small, recurring expenses like postage, stationery, conveyance, etc. It is impractical to issue cheques or write entries in the main cash book for these minor payments. The system used to manage these funds is typically the ‘Imprest System’.
What is the Imprest System?
The Imprest System is a method of maintaining a fixed amount of cash for petty expenses. Here’s how it works:
- Establishing the Float: At the beginning of a period (e.g., a month or a week), the main cashier gives a fixed sum of money, known as the ‘imprest amount’ or ‘float’, to a designated person called the ‘Petty Cashier’. This amount is estimated to be sufficient for the period’s petty expenses.
- Making Payments: The petty cashier makes all small payments out of this float and obtains supporting documents (vouchers) for each payment.
- Replenishment: At the end of the period, the petty cashier submits an account of all expenses to the main cashier. The main cashier then reimburses the petty cashier with the exact amount spent. This brings the cash balance held by the petty cashier back to the original imprest amount. This process is called replenishment.
Example: If the imprest amount is Rs. 2,000 and the petty cashier spends Rs. 1,500 during the month, the main cashier will reimburse Rs. 1,500. The petty cashier will again start the next month with Rs. 2,000 (Rs. 500 balance + Rs. 1,500 reimbursement).
Key Procedures and Concepts
1. Recording Petty Expenses
Expenses are recorded in an Analytical Petty Cash Book. This book has a column for the total amount paid and several other columns to analyze the expenses under specific heads like ‘Postage & Courier’, ‘Stationery’, ‘Conveyance’, ‘Miscellaneous Expenses’, etc. This analysis helps in controlling costs.
2. Balancing the Petty Cash Book
At the period’s end, the petty cash book is balanced. This involves:
- Totaling all the analysis columns. The sum of these totals must equal the total of the ‘Total Paid’ column.
- Calculating the closing balance: Balance (c/d) = Total Cash Received – Total Payments.
- This balance is carried forward (b/d) to the next period.
3. The Replenishment Procedure
After balancing, the petty cashier presents the book and vouchers to the main cashier. The main cashier verifies the records and issues a cheque or cash for the amount spent, restoring the float to its original level. The entry in the main cash book is a debit to ‘Petty Cash Account’ for the reimbursement amount.
Sample Format of an Analytical Petty Cash Book
| Date | Particulars | V.No. | Total Paid | Postage | Stationery | Travel |
|---|---|---|---|---|---|---|
| Apr 01 | To Cash (Float) | – | (Received) | – | – | – |
| Apr 03 | By Stamps | 1 | 100 | 100 | – | – |
| Apr 05 | By Bus Fare | 2 | 50 | – | – | 50 |
| Apr 08 | By Pens & Paper | 3 | 200 | – | 200 | – |
Quick Revision Points
- Petty Cash Book: For small, routine cash payments.
- Imprest System: A system where a fixed amount (float) is advanced, and the amount spent is reimbursed periodically.
- Petty Cashier: The person who manages the petty cash fund.
- Voucher: A document that serves as evidence for a payment.
- Replenishment: The process of restoring the petty cash fund to its original imprest amount.
- Balancing: The process of closing the book at the end of a period to find the cash in hand.
Extra Practice Questions
- What is the imprest amount also known as?
- Why is an analytical petty cash book more useful than a simple one?
- If the float is Rs. 5,000 and total expenses for the month are Rs. 4,200, what is the closing balance and how much will be reimbursed?
- Name three types of expenses typically recorded in a Petty Cash Book.
- What is the main advantage of the imprest system for controlling petty cash?
