When a petty cash fund is replenished the account to be credited is petty cash?

A petty cash account is an imprest account, so it is only debited when the fund is initially established or increased in amount. Transactions to replenish the account involve a debit to the expenses and a credit to the cash account (e.g., bank account).

When the petty cash fund is replenished the balance of the petty cash account decreases?

When the petty cash fund is replenished, the balance of the petty cash account increases. As petty cash is paid out, the balance of the petty cash account decreases. Using a memorandum as the source document for a dishonored check is an application of the accounting concept Objective Evidence.

What happens when a petty cash fund is replenished?

To replenish a petty cash fund. … When the fund is replenished, the credit to Cash is for the difference between the established amount and the actual cash in the fund. We would debit all vouchered items. Any discrepancy should be debited or credited to an account called Cash Over and Short.

How do you replenish petty cash journal entry?

To show this, debit your Petty Cash account and credit your Cash account. When the petty cash fund gets too low, you must refill it to its set amount. Then, create another journal entry debiting the Petty Cash account and crediting the Cash account.

What is the purpose of a petty cash fund?

The purpose of a Petty Cash Fund is to allow for the reimbursement or purchase of minor, small-dollar (less than $100), unanticipated business expenses, where the use of alternative means is neither feasible nor cost effective.

Why do businesses use petty cash funds quizlet?

Why do businesses use petty cash funds? For making small cash payments.

What is petty cash journal entry?

The petty cash journal entry is a debit to the petty cash account and a credit to the cash account. The petty cash custodian refills the petty cash drawer or box, which should now contain the original amount of cash that was designated for the fund. The cashier creates a journal entry to record the petty cash receipts.

How is petty cash recorded?

When a petty cash fund is in use, petty cash transactions are still recorded on financial statements. No accounting journal entries are made when purchases are made using petty cash, it’s only when the custodian needs more cash—and in exchange for the receipts, receives new funds—that the journal entries are recorded.

What is a replenishment check?

A term associated with petty cash. Replenish means to return the amount of actual cash in the petty cash box back to the amount appearing in the general ledger account Petty Cash. … A check is written on the company’s main checking account for the needed amount. This will be a credit to Cash.

What is petty account?

Petty cash is a nominal sum which is preserved in hand to cover minor expenses, such as reimbursements or other office-related expenses. Like other funds, petty cash will also be subject to regular reconciliations, with every transaction being recorded in the official statements and other records.

When it is necessary to replenish the petty cash fund the petty cashier prepares a statement of payments?

When it is necessary to replenish the petty cash fund, the petty cashier prepares a statement of payments. The check written to establish the petty cash fund is recorded in the journal by crediting Cash and debiting Petty Cash.

What is the difference between establishing and replenishing the petty cash fund?

To establish a petty cash fund, you must have a balance of starting cash. When that starting amount runs out, you must replenish the fund with additional cash.

What is petty cash reimbursement?

A petty cash reimbursement form may be used to replenish a petty cash fund, or reimburse a department or employee, who paid out-of-pocket for an unplanned departmental purchase. … Note: Petty cash reimbursements should only be used when other options like One Card are not available.

What account is petty cash under?

current assets
Petty cash appears within the current assets section of the balance sheet. This is because line items in the balance sheet are sorted in their order of liquidity. Since petty cash is highly liquid, it appears near the top of the balance sheet.

What does the replenishment mean?

1 : to fill or build up again replenish a supply of fuel … London’s population was continually being replenished with recruits from the countryside …—

When you replenish the petty cash fund How do you determine the amount of money to request?

Replenishment Threshold

Decide the amount you keep in petty cash and what you want your threshold to be by reviewing how much you use petty cash and the maximum amount of money you distribute at one time. For example, if you normally distribute $20 in petty cash at a time, $20 may be a good threshold.

Where does petty cash come from?

The term ‘petty cash’ derives directly from the word ‘petty’ meaning ‘minor’; ‘small’; ‘of secondary importance’. ‘Petty cash’ was a small amount of cash that was kept aside for trifling purchases, too small to require the effort of the making out and cashing of a cheque.

What is a replenishment amount?

Replenishment Amount

When your account balance reaches the low balance level, your account needs to be replenished. Your replenishment amount is your average monthly toll usage.