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WAEC Financial Accounting 2014 Question 3

Question 3

Petty Cash

In the operation of an imprest system of petty cash, the

  1. A.petty cashier pays all expenses.
  2. B.petty cashier pays money to the accountant.
  3. C.petty cashier regularly begins each period with the same amount of money.
  4. D.main cashier renders accounts to the petty cashier for some expenses made by him.
Show the answer and explanation

Answer: C (petty cashier regularly begins each period with the same amount of money.)

Explanation

Under the imprest system the petty cashier is topped up at the end of each period by the amount spent, so every period starts with the same fixed float.