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1.which of the following explains the imprest system of operating cash flow?
weekly expenditure cannot exceed as a set amount.
the exact amount of expenditure is reimbursed at intervals to maintain a fixed float
all expenditure out of the petty cash must be properly authorised.
regular equal amounts of cash are transferred into petty cash at intervals.
option B is correct.. why??? why isn’t option C and D correct?2.when sales day book had been overstated, doesn’t it affect in total of receivables balance???
1. B is correct because that exactly explains what the imprest system is.
Here is an example. I decide that we expect to need about $50 a week in petty cash. At the end of the first week I find that we have spent $40. So we have $10 left.
So I then get another $40 from the bank and we are back to $50.
The next week we spent $35, so we have $15 left. So we get another $35 from the bank and we are back to $50.
(C may be true, but it is not the imprest system; D is not true because the amount each time will not be equal.)You can read about the imprest system in Chapter 10 of our free Course Notes.
2. If the total of the sales day book (receivables journal) has been overstated, then yes – the amount posted to the Receivables Ledger Control Account will be overstated as well. It is the total that is posted to Control Account and to the Sales Account.
However, the individual accounts in the Receivables Ledger (and therefore the total of the list of balances in the receivables ledger) will not be affected. This is because each individual sale is entered in the Rec Ledger Accounts – nowhere is the total of the sales day book used.It might help you to watch my free lecture on Books of Prime Entry.
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thank yuh so much 🙂
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