TERM: 2nd TERM
SUBJECT: BUSINESS STUDIES
CLASS: JSS 2
TOPIC: THE PETTY CASHBOOK AND THE IMPREST SYSTEM
The petty cash book is a book for recording those minor cash transaction which are not paid for by means of cheques. It is used to record items of minor expenses. The petty cashbook is divided into the debit side and credit side as shown below.
Cash book folio
Post & Telgms N
REASONS FOR KEEPING A PETTY CASHBOOK
Business organizations keep petty cashbooks for any or all of the reasons given below.
PREPARATION OF PETTY CASHBOOK
For the month of June 2001, the following were the petty cash expenses in Dambatta Trading Company Limited up to the 11th of the month.
Voucher No 31 June 4 Cash in hand from the chief cashier 4,000.00
32 5 postage stamps 300.00
33 6 stationery 1,100.00
34 8 carriage 400.00
35 9 postage stamps 200.00
36 10 telegrams 600.00
37 11 stationery 800.00
Enter the expenditure in a petty cash book and bring down the balances to the end of the period.
4,000 July 1 Bal b/d
THE IMPREST SYSTEM
Under the impress system, a specific amount of money is given to the petty cashier in advance. The money is estimated to cover a given period which may be a week or a month. At the end of the period, the total money spent is given back to the petty cashier by the main cashier in order to make up to the original amount to begin a new period. This is called reimbursement.
CASH FLOW/ IMPRESS SYSTEM
Cash Flow, sources and uses of money within a business operation.
A third important activity-oriented financial statement is the statement of cash flows. This statement provides information not otherwise available in either an income statement or a balance sheet. The statement of cash flows presents the sources and the uses of the enterprise's cash by classifying each type of cash inflow and cash outflow according to the nature of the type of activity, such as operating activities, investing activities, and financing activities. The statement’s operating activities section identifies the cash generated or used by operations. Investing activities include the cash exchanged to buy and sell long-lived assets such as plant and equipment. Financing activities consist of the cash proceeds from stock issuances and loans and the cash used to pay dividends, to purchase the company's outstanding shares of its own stock, and to pay off debts.
Replacement of funds expended by the petty cashier.
(1) Spectrum for JSS 2 Page 82
(2) Business studies for JSS 2 by Lawal et al Pages 51 & 52.
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