BUISENESS MANAGEMENT
MERCHANDISING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Used to pay relatively small amounts.
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Established by estimating the amount of cash needed for disbursements of relatively small amounts during a specified period.
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Reimbursed when the amount of money in the fund is reduced to a predetermined minimum amount.
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All of the above.
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Detailed explanation-1: -A petty cash fund is a small amount of company cash, often kept on hand (e.g., in a locked drawer or box), to pay for minor or incidental expenses, such as office supplies or employee reimbursements. A petty cash fund will undergo periodic reconciliations, with transactions also recorded on the financial statements.
Detailed explanation-2: -The purpose of a petty cash fund is to provide business units with sufficient cash to cover minor expenditures. The intent is to simplify the reimbursement of staff members and visitors for small expenses that generally do not Exceed $25.00, such as taxi fares, postage, office supplies, etc.
Detailed explanation-3: -Petty cash is a current asset listed as a debit on the balance sheet. An accountant will typically write a cheque to “Petty Cash” to fund the petty cash account and cash this cheque at the company’s bank.
Detailed explanation-4: -Petty cash is a current asset and should be listed as a debit on the balance sheet. When first funding a petty cash account, the accountant should write a check made out to “Petty Cash” for the desired amount of petty cash and then cash the check at the company’s bank.