Lesson Notes By Weeks and Term - Junior Secondary School 2

TERM: 2nd TERM

SUBJECT: BUSINESS STUDIES                                

CLASS:  JSS 2

REFERENCE

• WABP Junior Secondary Business Studies 2 by Egbe Ehiametalor et’al.

WEEK NINE

TOPIC: THE PETTY CASHBOOK AND THE IMPREST SYSTEM

CONTENT

• Meaning of a petty cashbook
• Columns
• Recording receipts and payments
• Imprest system
• Cashflow imprest
• Reinbursements

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.

DR                                                   CR                                                                                                                                                  

REASONS FOR KEEPING A PETTY CASHBOOK

Business organizations keep petty cashbooks for any or all of the reasons given below.

1. Expansion of business activities might lead to a growth of petty cash expenses and a petty cashbook is introduced to record these expenses.
2. It will be difficult to raise a cheque for every single item of expenditure.
3. Monitoring expenses on small items is easy.
4. Through the petty cash book an organization can know the rough estimate of what is to be spent on  minor expenses for a year.
5. It is a safety control over petty cash expenses.

PREPARATION OF PETTY CASHBOOK

An Illustration   

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.

1.                                   CR.                                                                                                                                            

4,000                    July 1         Bal b/d

EVALUATION

1. Draw out the format of a petty cash book
2. What is a petty cash book.

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.

Reimbursement

Replacement of funds expended by the petty cashier.

EVALUATION

1. Write a short note on cash flow 
2. What is impress system.

READING ASSIGNMENT

(1) Spectrum for JSS 2 Page 82

(2) Business studies for JSS 2 by Lawal et al Pages 51 & 52.

GENERAL EVALUATION

1. Mention three divisions of occupation.
2. What is business studies?
3. Mention three rewards of a good attitude to work.
4. Define punctuality.
5. What is trade?

WEEKEND ASSIGNMENT

1. The book for recording minor expenses is called …………………………..  (a) Petty cash payment (b) petty cash book  (c) disbursement  (d) reimbursement.
2. ………………… keeps the petty cashbook.  (a) Main cashier (b) accountant (c) petty cashier (d) personnel manager.
3. The giving out of a specific amount of money to the petty cashier to take care of minor /small expenses is called …….  (a) Giving out system  (b) petty cash system  (c) imprest system (d) open system.
4. The practice of giving back the money spent to the petty cashier at the end of a period is called ……………………system   (a ) imprest  (b) disbursement  (c) reimbursement  (d) restoration
5. The petty cashbook is a ……………………………… control over cash expenses.  (a) safety  (b) suspicious  (c) spacious  (d) ample.

THEORY

1.  What is the importance of the petty cashbook?
2. Explain what is meant by the impress system of the petty cashbook