Question

Which of the following is correct regarding a petty cash fund? A petty cash fund is used for minor purposes. A petty cash fund represents cash on hand at the business for quick access. When cash from this fund is taken out, it should be replaced with a voucher. All of the answers are correct regarding a petty cash fund.

Answer 1

Answer:

The correct answer is letter "D": All of the answers are correct regarding a petty cash fund.

Explanation:

Petty cash funds are sums of money that are useful for businesses to take care of small payments. These payments are too low to allow a check to be written for payment. In some businesses, each department maintains its own small cash box for expenses such as office supplies per unit.

For accounting purposes, transactions involving petty cash are documented only when the petty cash was totally spent and a new fund is to be created and recorded with a voucher.