Q12RQ - Horngren'S Financial And Managerial Accounting

Question

When are the only times the Petty Cash account is used in a journal entry?

Step-by-Step Solution

Answer

The petty cash account used the transaction of the petty cash fund made.

Step 1: Definition of petty cash account

The petty cash fund account is the account used to record the transaction of the petty cash fund.

Step 2: Petty cash account used in a journal entry

The petty cash account is used in the journal entry only when the amount of the fund is increased or decreased. In simple words, the petty account is used when the petty cash fund is affected. The petty cash fund increases when the amount is received, and the petty cash fund amount decreases when payment is made.