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Question

Which of the following payments is made from petty cash?


A

Purchase of non-current assets.

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B

Payment to creditors.

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C

Cash deposited into a bank.

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D

Payment of postage and telegrams.

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Solution

The correct option is D

Payment of postage and telegrams.


Answer: (D) Payment of postage and telegram

Explanation: Payment of postage and telegrams are made from the petty cash book because the expenses incurred are minute and a cheque can’t be issued for the same. A petty cash book records the daily expenses of a business which are important to the business but are minuscule in nature.

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