AFE Quiz 20: Petty Cash – Accounting for Everyone

What is the primary purpose of a petty cash fund?

To pay small, incidental expenses
To handle payroll
To deposit daily sales
To pay large invoices

When establishing a petty cash fund, which account is debited?

Cash
Petty Cash
Expenses
Accounts Payable

Which of the following would NOT typically be paid from petty cash?

Postage stamps
Office supplies
Utility bills
Taxi fare for a quick errand

What document is used to support each payment from the petty cash fund?

Petty cash voucher
Bank statement
Invoice
Deposit slip

When replenishing petty cash, which account is credited?

Petty Cash
Cash
Expenses
Accounts Receivable

Which of the following is TRUE about the petty cash fund?

It is replenished when it runs low
It is closed at the end of each month
It is used to pay employee salaries
It is increased whenever an expense is incurred

What is the normal balance of the Petty Cash account?

Credit
Debit
No balance
Varies

If a petty cash fund is over, what account is credited when replenishing?

Cash Short and Over
Petty Cash
Expenses
Accounts Payable

Which of the following is NOT a reason to replenish the petty cash fund?

The fund is low on cash
To record expenses paid from petty cash
To increase the size of the fund
To maintain control over cash disbursements

When increasing the amount of the petty cash fund, which accounts are affected?

Debit Petty Cash, Credit Cash
Debit Cash, Credit Petty Cash
Debit Expenses, Credit Petty Cash
Debit Expenses, Credit Cash