Question

A company set-up a petty cash fund with $800. The disbursements are as follows:

Office Supplies

$300

Shipping

50

Postage

30

Delivery Expense

$350

Answer the question below based on the above information.

To create the fund, which account should be credited?

Question 1 options:

Petty Cash


Cash at Bank


Supplies


Postage

Answer 1

The account that should be credited to create the petty cash fund is Cash at Bank.

Step-by-step explanation:

The account that should be credited to create the petty cash fund is Cash at Bank. "Cash at bank" refers to the amount of money a business holds in its bank accounts. It represents liquid assets that are readily available for transactions, payments, or investments.

This line item on a financial statement reflects the balance of funds held in checking or savings accounts, providing insights into a company's short-term liquidity and its ability to meet financial obligations or capitalize on opportunities. When setting up a petty cash fund, an initial amount is transferred from the general cash account to the petty cash account. In this case, the company transferred $800 from its Cash at Bank account to create the petty cash fund.