Multiple Choice
A petty cash fund is an efficient way to handle what type of payments?
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6. Internal Controls and Reporting Cash
Petty Cash
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Which of the following best describes a petty cash receipt?
A
A document that records the details of a small cash payment made from the petty cash fund.
B
A summary of all cash sales for the day.
C
A bank statement showing monthly account activity.
D
A check issued to pay a large supplier invoice.
Verified step by step guidance1
Understand the concept of petty cash: Petty cash is a small amount of cash kept on hand to cover minor expenses that are impractical to pay by check or electronic transfer.
Define a petty cash receipt: A petty cash receipt is a document used to record the details of a small cash payment made from the petty cash fund. It typically includes the date, amount, purpose of the payment, and the recipient's name.
Analyze the options provided: Compare each option to the definition of a petty cash receipt. For example, 'A summary of all cash sales for the day' refers to sales activity, not petty cash. 'A bank statement showing monthly account activity' pertains to bank transactions, not petty cash. 'A check issued to pay a large supplier invoice' involves larger payments, not small cash transactions.
Identify the correct description: The correct description aligns with the definition of a petty cash receipt, which is a document recording small cash payments from the petty cash fund.
Conclude the reasoning: Based on the analysis, the correct answer is the option that matches the definition of a petty cash receipt, ensuring clarity and understanding of its purpose in financial accounting.
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