Petty Cash Systems

State whether each situation uses
Imprest system | Non-imprest system

Petty cash is always maintained at 2,000.
➛ Imprest system

Cash is added whenever the box is empty.
➛ Non-imprest system

Vouchers plus cash equal the float.
➛ Imprest system

No fixed limit for petty cash balance.
➛ Non-imprest system

State whether the expense is suitable for petty cash

Taxi fare
➛ Yes

Office rent
➛ No

Postage stamps
➛ Yes

Monthly salaries
➛ No

Petty cash float = 1,500

Vouchers show
➛ Stationery = 400
➛ Transport = 300
➛ Refreshments = 200

Tasks

Total vouchers
➛ 400 + 300 + 200 = 900

Cash remaining
➛ 1,500 − 900 = 600

Amount needed for replenishment
➛ 900

Journal entry required
➛ Dr Stationery Expense ➧ 400
➛ Dr Transport Expense ➧ 300
➛ Dr Refreshments Expense ➧ 200
➛ Cr Bank / Cash ➧ 900

A small business keeps petty cash of 3,000 under the imprest system.

During the week, vouchers show
➛ Courier charges = 600
➛ Office supplies = 900
➛ Tea and snacks = 300

Questions

How much cash remains?
600 + 900 + 300 = 1,800 | total expenses
➛ 3,000 − 1,800 = 1,200

How much should be replenished?
➛ 1,800

Write the replenishment journal entry.
➛ Dr Courier Charges Expense ➧ 600
➛ Dr Office Supplies Expense ➧ 900
➛ Dr Refreshments Expense ➧ 300
➛ Cr Bank / Cash ➧ 1,800

Name two controls that should exist over petty cash.
➛ Use petty cash vouchers for every payment
➛ Keep petty cash in a locked box
➛ Appoint one petty cashier
➛ Regular checking and reconciliation

Any two earn full marks

What is the purpose of petty cash?
➛ To pay small, minor business expenses conveniently.

Which petty cash system is most commonly used?
➛ Imprest system

What is a petty cash voucher?
➛ A document used to record and authorize petty cash payments.

How is petty cash replenished under the imprest system?
➛ By restoring the cash balance to its original fixed amount.

Large expenses should be paid from petty cash.
➛ False

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