Which of the following procedures is incorrect for establishing and maintaining a petty cash fund?
A)A check is prepared for a small, fixed amount; when the check is cashed, the money is entrusted to a petty cash custodian.
B)The company must obtain the cash needed for the fund and record an entry for the establishment of the fund.
C)When appropriate documentation is presented, cash payments are made from the fund; the petty cash custodian retains the documentation.
D)When the petty cash fund needs to be replenished, an entry is recorded to recognize an increase in the petty cash account.

Question

Quizplus · Accepted Answer

When the petty cash fund needs to be replenished, an entry should be recorded to recognize a decrease in the petty cash account, not an increase. The entry should be a debit to the appropriate expense account and a credit to the petty cash account.

Which of the Following Procedures Is Incorrect for Establishing and Maintaining