The owner of Barnes Company established a petty cash fund amounting to $400.What is the effect on the financial statements of recording this transaction?

Question

Quizplus · Accepted Answer

Establishing a petty cash fund increases one asset (petty cash) and decreases another asset (cash). This asset exchange transaction has no overall effect on total assets. There is no effect on stockholder's equity or net income. It does not affect the statement of cash flows.

The Owner of Barnes Company Established a Petty Cash Fund