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 credited?

supplies
cash at bank
petty cash
postage

Explanation:

Identify the transaction to establish the fund

The transaction is to set up (establish) a petty cash fund with \$800.

Determine the debit and credit accounts

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).

$$ \text{Debit: Petty Cash } \$800 $$

$$ \text{Credit: Cash at Bank } \$800 $$

Match with the given options

The question asks which account should be credited. The account to be credited is Cash at Bank.

Answer:

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