Chapter 3

1. Susan uses the imprest method of accounting for petty cash. She counted the petty cash and there
was $90.

There were also the following petty cash vouchers:

1. Sundry Purchases $90

2. Loan to sales manager $60

3. Purchase of staff drinks $80

4. Sundry sales receipts $160

What is Susan’s imprest amount?

A. 480

B. 40

C. 300

D. 160

Answer: D. 160

Imprest amount (opening balance) + cash in – cash out = cash in hand at end of month
=> Imprest amount = 90 + (90 + 60 + 80 ) - 160 = 160

2. A business received a delivery of goods on 29 June 2013, which was included in inventory at 30
June 2013. The invoice for the goods was recorded in July 2013. What effect will this have had on the
business

A. Inventory at 30 June will be understated

B. Inventory at 30 June 2013 will be overstated

C. Profit for the year ended 30 June 2013 will be overstated

D. Profit for the year ended 30 June 2014 will be overstated

Answer:

C. The goods were correctly included in inventory. The invoice should also have been included.
Because it had not been, purchases have been understated and therefore profit overstated.

3. B operates the imprest system for petty cash. At 1 July there was a float of $150 but it was decided
to increase this to $200 from 1 August onwards. During July, the petty cashier received $25 from staff
for using the photocopier and a cheque for $90 was cashed for an employee. In July, cheques were
drawn for $500 for petty cash. What was the total expense paid from petty cash in July?
A. $385

B. $435

C. $515

D. $615

Answer: A. $385

Dr Petty cash control Cr

$ $

1 July Float b/f 150

Cash received from staff 20 Window cleaning 20

Miscellaneous sale 60 Stationery 100

Bank (balancing figure) 260 Coffee and biscuits 145

28 February float 375

640 640