Question

The petty cash account is a(n) _____ account, meaning it always has the same balance in the general ledger:

a. Debit
b. Credit
c. Imprest
d. Active

Answer 1

The petty cash account is an c. imprest account, always replenished to the same amount, which ensures it maintains a constant balance in the general ledger.

Step-by-step explanation:

The petty cash account is a imprest account, meaning it always has the same balance in the general ledger. An imprest account is one that is replenished to the original amount each time it is used. In other words, it starts with a fixed amount of cash, and whenever expenses are paid out of the account, it is 'topped up' to return to that original amount during the replenishment process. This makes budgeting and controlling cash flows easier, as the account will not fluctuate over time and always reflects a predetermined balance.