BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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42, 000
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27, 000
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37, 000
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22, 000
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Detailed explanation-1: -An imprest system of petty cash means that the general ledger account Petty Cash will remain dormant at a constant amount. If the amount of petty cash is $100, then the Petty Cash account will always report a debit balance of $100. This $100 is the imprest balance.
Detailed explanation-2: -Under petty cash accounting, a petty cash fund is created with a certain sum of money that is decided by the management to be used to meet the daily expenses. It is replenished at the end of the period or when necessary. Therefore, the correct answer is c) a debit to Petty Cash and a credit to Cash.
Detailed explanation-3: -The entry must show an increase in your Petty Cash account and a decrease in your Cash account. To show this, debit your Petty Cash account and credit your Cash account. When the petty cash fund gets too low, you must refill it to its set amount.
Detailed explanation-4: -An imprest account is used for handling minor disbursements whereby a fixed amount of money is set aside for this purpose. Disbursements are made as needed with a receipt or petty cash voucher being completed in each case.