Question

A company has established a petty cash fund of $200. At the end of the month, there is still $143 of cash left in the fund. Which of the following is TRUE? the company should replenish the fund as the rules state it needs to have $200 cash the company should replenish the fund in order to record the costs incurred in the petty cash fund in the accounts the company should not replenish the cash as there is likely enough for next month the company should abandon the use of a petty cash fund as it is obviously not required

Answer 1

The company should replenish the petty cash fund with $57 to restore it to the original $200 and to record the expenses in the accounts.

Step-by-step explanation:

The company should replenish the fund in order to record the costs incurred in the petty cash fund in the accounts. When a petty cash fund is established, the amount of cash in the fund should be restored to the original amount periodically. In this case, the fund started with $200 and now has $143, indicating that $57 has been spent. To replenish the fund, the company needs to add $57 to bring the total back to $200. This is also an opportunity to record the expenses that have been paid out of petty cash, ensuring that all financial transactions are accurately reflected in the company's accounts.

The company should replenish the fund in order to record the costs incurred in the petty cash fund in the accounts. A petty cash fund is used to cover small expenses that occur on a regular basis, such as office supplies or snacks for employees. By replenishing the fund, the company ensures that there is enough cash available to cover these expenses and also provides a record of the costs in the company's accounts.