If the petty cash fund is not replenished on the balance sheet date:
A)cash and income will be overstated.
B)income will be understated.
C)cash will be understated.
D)liabilities will be understated.

Question

Quizplus · Accepted Answer

When the petty cash fund is not replenished on the balance sheet date, expenses that should have been recorded and deducted from cash are not recognized. This results in the cash balance being higher than it should be (because the cash outflows haven't been recorded) and income being higher than it should be (because the expenses haven't been deducted).

If the Petty Cash Fund Is Not Replenished on the Balance