Chap.5-Sec.4: Petty Cash
Petty Cash slip
A form showing proof of a petty cash payment.
Petty Cash
An amount of cash kept on hand and used for making small payments.
What account is Petty Cash?
Asset
How do you journalize the entry to replenish petty cash funds?
1) Write the date 2) Write title of the first account debited and the amount that should be debited to the first account that was debited. *There can be many accounts debited because the business has so many expenses 3) Write the title of the account credited 4) Write the source document
What does a Petty Cash slip show?
1. Petty Cash slip number 2. Date of petty cash payments 3. Whom paid to 4. Reason for the payment 5. Amount paid 6. Account in which amount is to be recorded 7. Signature of the person approving the petty cash payment.
How do you establish a Petty Cash fund?
1.Date 2.Debit 3.Credit 4.Source Document
Why do businesses use Petty Cash funds?
A business usually has some small payments for which writing a check is not time or cost effective.
Where is Petty Cash's normal balance?
On the debit side Petty Cash's account increases on the debit side and decreases on the credit side
What is replenishing Petty Cash?
Putting more money back in the petty cash box. Before it is replenished, a proof of the fund being put in to the box must be complete.
Why is Cash and not Petty Cash credited when a petty cash fund is replenished?
The check issued to replenish petty cash is a credit to cash and does not affect petty cash.