Multiple Choice
Which of the following transaction types can typically be made into recurring journal entry templates in financial accounting systems?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
Which of the following is the correct journal entry to record the reimbursement of the petty cash fund when expenses have been incurred and paid from petty cash?
A
Debit various expense accounts and credit Cash
B
Debit various expense accounts and credit Petty Cash
C
Debit Petty Cash and credit various expense accounts
D
Debit Cash and credit Petty Cash
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. When petty cash is used to pay for expenses, the reimbursement process involves recording the expenses and replenishing the petty cash fund.
Analyze the reimbursement process: When petty cash is reimbursed, the expenses paid from petty cash are recorded in the appropriate expense accounts, and the cash used to replenish the fund is credited to the Cash account (not the Petty Cash account). This ensures the petty cash fund remains at its original balance.
Determine the correct accounts to debit: Identify the various expense accounts that correspond to the expenses incurred (e.g., Office Supplies, Travel Expenses, etc.). These accounts should be debited to reflect the expenses paid.
Determine the correct account to credit: The Cash account should be credited because the reimbursement involves withdrawing cash from the company's bank account to replenish the petty cash fund.
Review the journal entry format: The correct journal entry to record the reimbursement of the petty cash fund is: Debit various expense accounts (e.g., Office Supplies, Travel Expenses) and Credit Cash. This entry ensures the expenses are properly recorded and the petty cash fund is replenished.
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