An analytical cash book is used to ____
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Correct Answer: Option B
Explanation:
An analytical cash book, often referred to as a columnar petty cash book, is a specialized accounting record used primarily to manage petty cash — small amounts of money used for minor or routine expenses (like postage, stationery, travel fares, etc.)
Purpose:
The primary purpose of an analytical cash book is to categorize petty cash payments into various heads of expenditure. This helps in monitoring how petty cash is being spent, making it easier for management to control costs and prepare financial reports.
Structure:
Left Side (Receipts): Usually shows the opening balance and any cash received (e.g., reimbursement from the main cash account).
Right Side (Payments): Contains multiple analysis columns, each labeled for a specific type of expense — e.g., postage, stationery, travel, refreshments.
There is usually a "Total Payments" column to record the full amount paid, and then this amount is broken down across the analysis columns depending on the nature of the expense.
Key Features:
Helps in classifying expenses systematically.
Makes it easier to summarize petty cash expenses at the end of a period.
Useful in internal control over small disbursements.
Typically maintained by a petty cashier under the imprest system, where a fixed amount is given and replenished periodically.
An analytical cash book, often referred to as a columnar petty cash book, is a specialized accounting record used primarily to manage petty cash — small amounts of money used for minor or routine expenses (like postage, stationery, travel fares, etc.)
Purpose:
The primary purpose of an analytical cash book is to categorize petty cash payments into various heads of expenditure. This helps in monitoring how petty cash is being spent, making it easier for management to control costs and prepare financial reports.
Structure:
Left Side (Receipts): Usually shows the opening balance and any cash received (e.g., reimbursement from the main cash account).
Right Side (Payments): Contains multiple analysis columns, each labeled for a specific type of expense — e.g., postage, stationery, travel, refreshments.
There is usually a "Total Payments" column to record the full amount paid, and then this amount is broken down across the analysis columns depending on the nature of the expense.
Key Features:
Helps in classifying expenses systematically.
Makes it easier to summarize petty cash expenses at the end of a period.
Useful in internal control over small disbursements.
Typically maintained by a petty cashier under the imprest system, where a fixed amount is given and replenished periodically.