A system where a separate cash book is maintained for small payments is ____
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Correct Answer: Option B
Explanation:
The imprest system is a method used to manage and control petty cash or small payments. Under this system, a fixed amount of money is allocated for petty cash, and when this amount is spent, it is replenished back to the original amount. This ensures that there is always a set balance for small expenses.
In this system, a separate cash book (called the petty cash book) is maintained to track the small payments. When the petty cash runs low, the fund is topped up by the business to the original balance.
The imprest system is a method used to manage and control petty cash or small payments. Under this system, a fixed amount of money is allocated for petty cash, and when this amount is spent, it is replenished back to the original amount. This ensures that there is always a set balance for small expenses.
In this system, a separate cash book (called the petty cash book) is maintained to track the small payments. When the petty cash runs low, the fund is topped up by the business to the original balance.