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JAMB Principles of Accounts 1994 Question 13

Question 13

Petty Cash

When is a petty cash account debited?

  1. A.When the fund is established and every time money is spent
  2. B.When the fund is established and every time it is replenished
  3. C.When the fund is established and when the size of the fund is decreased
  4. D.Every time money is drawn from the petty cash.
Show the answer and explanation

Answer: B (When the fund is established and every time it is replenished)

Explanation

Under the imprest system the petty cash account is debited with the opening float and each time the float is topped up (replenished); spending is credited.