CA Foundation Exam > CA Foundation Questions > In petty cash Book, the system followed :a)Ac...
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In petty cash Book, the system followed :
- a)Accrual System
- b)Imprest System
- c)Cash system
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
In petty cash Book, the system followed :a)Accrual Systemb)Imprest Sys...
In the beginning of every month or period main cashier gives some amount to the petty cashier.this system is called as Imprest system
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In petty cash Book, the system followed :a)Accrual Systemb)Imprest Sys...
Understanding Petty Cash Book
The Petty Cash Book is an essential part of financial management, primarily used for recording small and incidental expenses. The system commonly used for managing petty cash is the Imprest System.
What is the Imprest System?
- The Imprest System is a method of maintaining a set amount of cash for small expenses.
- It involves establishing a fixed amount, known as the imprest amount, which is replenished once it gets depleted.
Key Features of the Imprest System
- Fixed Cash Balance: The petty cash fund is maintained at a specific amount (e.g., $100).
- Replenishment Process: When the cash in the fund is spent and falls below a certain level, receipts are collected, and a request for replenishment is made to bring the fund back to the original amount.
- Tracking Expenses: All expenses are recorded in the Petty Cash Book, which helps in tracking how the funds are utilized.
Advantages of the Imprest System
- Control: Provides better control over small expenses by requiring documentation for each transaction.
- Simplicity: It simplifies the accounting process for small cash transactions.
- Easier Auditing: Since expenses are recorded and supported by receipts, it eases the auditing process.
Conclusion
The Imprest System is crucial for managing petty cash effectively, ensuring funds are used judiciously while maintaining a streamlined process for tracking and replenishing cash. This system is particularly beneficial for organizations seeking to control small expenditures efficiently.
The Petty Cash Book is an essential part of financial management, primarily used for recording small and incidental expenses. The system commonly used for managing petty cash is the Imprest System.
What is the Imprest System?
- The Imprest System is a method of maintaining a set amount of cash for small expenses.
- It involves establishing a fixed amount, known as the imprest amount, which is replenished once it gets depleted.
Key Features of the Imprest System
- Fixed Cash Balance: The petty cash fund is maintained at a specific amount (e.g., $100).
- Replenishment Process: When the cash in the fund is spent and falls below a certain level, receipts are collected, and a request for replenishment is made to bring the fund back to the original amount.
- Tracking Expenses: All expenses are recorded in the Petty Cash Book, which helps in tracking how the funds are utilized.
Advantages of the Imprest System
- Control: Provides better control over small expenses by requiring documentation for each transaction.
- Simplicity: It simplifies the accounting process for small cash transactions.
- Easier Auditing: Since expenses are recorded and supported by receipts, it eases the auditing process.
Conclusion
The Imprest System is crucial for managing petty cash effectively, ensuring funds are used judiciously while maintaining a streamlined process for tracking and replenishing cash. This system is particularly beneficial for organizations seeking to control small expenditures efficiently.
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Question Description
In petty cash Book, the system followed :a)Accrual Systemb)Imprest Systemc)Cash systemd)None of theseCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about In petty cash Book, the system followed :a)Accrual Systemb)Imprest Systemc)Cash systemd)None of theseCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In petty cash Book, the system followed :a)Accrual Systemb)Imprest Systemc)Cash systemd)None of theseCorrect answer is option 'B'. Can you explain this answer?.
In petty cash Book, the system followed :a)Accrual Systemb)Imprest Systemc)Cash systemd)None of theseCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about In petty cash Book, the system followed :a)Accrual Systemb)Imprest Systemc)Cash systemd)None of theseCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In petty cash Book, the system followed :a)Accrual Systemb)Imprest Systemc)Cash systemd)None of theseCorrect answer is option 'B'. Can you explain this answer?.
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