The entry to establish the petty cash fund debited Misc. Expense. This would cause

Name: The entry to establish the petty cash fund debited Misc. Expense. This would cause
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When establishing the petty cash fund, expense should be debited because cash is being reduced. Miscellaneous expense is the appropriate account to use since it is not clear which specific expense the petty cash will be used for. Therefore, this would cause expenses to be overstated.

The Entry to Establish the Petty Cash Fund Debited Misc