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?

cash at bank
supplies
petty cash
postage

Explanation:

Identify the transaction type

We need to record the initial establishment of a petty cash fund.

Analyze the accounts involved

Using the Account Classification knowledge point, establishing a fund transfers cash from the main bank account to a specialized cash account.

• Petty Cash (Asset) increases.
• Cash at Bank (Asset) decreases.

Determine debits and credits

An increase in an asset account is recorded as a debit.

• Debit: Petty Cash \$800
• Credit: Cash at Bank \$800

Select the correct option

The account that should be debited is Petty Cash.

Answer:

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