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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cash Book, Bank Book, Petty Cash Book, Bank Reconciliation Statement

In a columnar petty cash book maintained on the imprest system, which statement is correct about the posting of the total of the analysis columns to the ledger?

Each analysis column total is debited to the relevant expense account in the ledger, while the reimbursement received from the head cashier is shown as a payment in the main cash book. This records expenses by head and the cash outflow correctly. Crediting expenses would reverse the entries.

  1. AEach expense column total is debited to its respective expense account in the ledger, and the petty cash account is credited through the cash book reimbursementCorrect
  2. BEach expense column total is credited to its expense account, and the petty cash account is debited
  3. COnly the total amount reimbursed is posted, and expense accounts are never debited
  4. DIndividual petty payments are credited to the head cashier account

Explanation

Column totals of each expense head are debited to the respective expense accounts, while the reimbursement from the head cashier is credited in the main cash book. Crediting expenses would reverse the effect. Posting only the reimbursement would leave expense accounts understated.

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