Which of the following is the correct entry to establish a petty cash fund in the amount of $300?
A)Cash 300 Petty Cash Fund 300
B)Petty Cash Fund 300 Cash 300
C)Miscellaneous Expense 300 Petty Cash Fund 300
D)None of these, as no entry is necessary to record an exchange of cash.

Question

Quizplus · Accepted Answer

The correct entry to establish a petty cash fund in the amount of $300 is to debit the Petty Cash Fund account for $300, and credit the Cash account for $300. Therefore, choice B (Petty Cash Fund 300 Cash 300) is the correct entry. Choice A is incorrect because it debits the Cash account instead of crediting it. Choice C is incorrect because it incorrectly records the establishment of a new account called Miscellaneous Expense. Choice D is incorrect because an entry is necessary to record the establishment of a petty cash fund.

Which of the Following Is the Correct Entry to Establish