Chapter#3A: Petty Cash

Question 1

What is a Petty Cash Account used for?

Answer 1

it is often maintained for small purchases

Question 2

What is the General Rule with Petty Cash?

Answer 2

is that the amount of money in the cash box, plus the receipts must always total the original amount of money designated for petty cash

Question 3

What is Reconciling the Petty Cash account?

Answer 3

its the process of comparing the cash plus receipts to the original balance

Question 4

What are the 3 steps to record disbursements in the Petty Cash Record?

Answer 4

1. Record the date of the transaction followed by a description of the item and the total amount paid.
2. Record the dollar value of the item purchased in the appropriate expense column. If the expense does not fit into one of the three categories listed, use the next two columns for any other disbursements.
3. Enter the amount of GST paid in the last column.

Question 5

How would you Increase the Petty Cash?

Answer 5

To increase the fund you would debit Petty Cash and credit the bank

Question 6

How would you Decrease the Petty Cash?

Answer 6

You would Credit the Petty Cash and debit the Bank