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JAMB Principles of Accounts 1995 Question 10

Question 10

Petty Cash

What are the advantages of an imprest petty cash book?
I Cheques can be drawn easily
II A check on the use of cash
III Liability of the petty cashier is limited to the value of petty cash
IV Loses through the petty cashier can be minimized.

  1. A.I, II and III only
  2. B.I, II and IV only
  3. C.I, III and IV only
  4. D.II, III and IV only.
Show the answer and explanation

Answer: D (II, III and IV only.)

Explanation

The imprest system controls cash spending, limits what the petty cashier is responsible for to the float, and so reduces losses. It has nothing to do with drawing cheques.