Final answer:
It is true that to establish a change fund, Cash should be credited and Change Fund should be debited. This accounting transaction reallocates a portion of liquid cash to a separate balance sheet asset account, ensuring there are funds dedicated to making change for transactions.
Step-by-step explanation:
To answer your question, it is true that to establish a change fund, Cash should be credited and Change Fund should be debited. This is because the change fund is a set amount of money, in various denominations, used to make change for customers. When you establish this fund, you are effectively setting aside a portion of your cash to be used specifically for making change, which is not to be used for any other business expenses.
By debiting the Change Fund account, you are increasing the asset on the balance sheet since you now have funds allocated specifically for making change. Crediting the Cash account decreases the amount of liquid cash available for use since it is now tied up in the Change Fund. This transaction ensures that cash is available to handle transactions without affecting the main cash reserves of the business.