Question

a company set-up a petty cash fund with $800. the disbursements are as follows:

office supplies: $300
shipping: 50
postage: 30
delivery expense: $350

answer the question below based on the above information.

to create the fund, which account should be debited?

• supplies
• postage
• petty cash
• cash at bank

Explanation:

Identify the transaction type

Using the Petty Cash Fund knowledge point

The transaction asks for the journal entry required to establish or "create" a new petty cash fund.

Determine the debit and credit accounts

Using the Petty Cash Fund knowledge point

To establish a petty cash fund, the asset account Petty Cash is increased (debited) and the asset account Cash (or Cash at Bank) is decreased (credited).

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Answer:

• Supplies
• Postage
• Petty Cash (Correct answer)
• Cash at Bank