Overview and Purpose 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.
What is the purpose of a petty cash fund quizlet?
The petty cash fund is a special fund set up to pay for minor expenses with cash instead of paying by cheque (e.g. tea and coffee, fares, stamps).
How is petty cash established?
To establish a petty cash fund, someone must write a check to the petty cash custodian, who cashes the check and keeps the money in a locked file or cash box. The transaction that replenishes the petty cash fund is recorded with a compound entry that debits all relevant asset or expense accounts and credits cash.
What is petty cash quizlet?
Petty Cash. An amount of cash kept on hand and used for making small payments.
What happens when petty cash is replenished?
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.
What is the modern equivalent of petty cash?
How do you do petty cash reconciliation?
Take the following steps to reconcile petty cash:
- Ascertain stated balance. Review the company’s petty cash policy and determine the stated petty cash balance for the fund to be reviewed.
- Obtain reconciliation form.
- Calculate withdrawn cash.
- Summarize vouchers.
- Investigate variances.
What do you call negative cash on a balance sheet?
Cash Overdraft in Balance Sheet In the balance sheet, show the negative cash balance as Cash Overdraft in the current liabilities. Or you can also include the amount in accounts payable. If you are netting the three bank accounts, consider using the Cash Overdraft option.