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Petty Cash Book Video Lecture - Commerce
FAQs on Petty Cash Book Video Lecture - Commerce
| 1. What is a petty cash book? |  |
Ans. A petty cash book is a record of small, day-to-day expenses that a business incurs. It is a way to track and control small cash transactions that are not suitable for payment by check or credit card. The petty cash book helps in maintaining transparency and accountability for these expenses.
| 2. What are the advantages of using a petty cash book? | |
Ans. There are several advantages of using a petty cash book. Firstly, it helps in streamlining the process of recording and managing small expenses, reducing the chances of errors or omissions. Secondly, it provides a clear audit trail for all petty cash transactions, making it easier for the business to track and reconcile these expenses. Lastly, it promotes financial discipline by setting limits on petty cash expenditures and ensuring proper documentation.
| 3. How is a petty cash book maintained? | |
Ans. To maintain a petty cash book, a designated person is assigned the responsibility of handling and recording petty cash transactions. This person is known as the petty cash custodian. The custodian receives a fixed amount of cash, known as the imprest amount, to replenish the petty cash fund. Each time an expense is incurred, the custodian records the details in the petty cash book, categorizes the expenses, and keeps the supporting receipts. At regular intervals, the custodian reconciles the petty cash book with the actual cash on hand.
| 4. What are the common categories of expenses recorded in a petty cash book? | |
Ans. The common categories of expenses recorded in a petty cash book include office supplies, postage and courier charges, travel expenses, entertainment expenses, and small repairs and maintenance costs. These categories may vary depending on the nature of the business and its specific needs. It is important to establish clear guidelines and policies for what expenses are eligible for petty cash reimbursement.
| 5. How often should a petty cash book be reconciled? | |
Ans. A petty cash book should be reconciled at regular intervals, preferably on a monthly basis. This ensures that the cash on hand matches the recorded transactions in the book. The reconciliation process involves comparing the total amount of cash in the petty cash box with the total amount of expenses recorded in the petty cash book. Any discrepancies should be investigated and resolved promptly to maintain accurate financial records.
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Nov 08, 2024 Last updated |
Petty Cash Book for Commerce2024 is part of Commerce preparation. The notes and questions for Petty Cash Book
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