When reimbursing the petty cash fund:

Question

Quizplus · Accepted Answer

When reimbursing the petty cash fund, appropriate expense accounts are debited because the petty cash fund is used to pay for small expenses that are not recorded immediately in the accounting system. Therefore, when reimbursing the fund, the expenses that were paid for using the fund are recorded as debits to the respective expense accounts. Petty Cash is credited with the amount of the reimbursement. Cash is not debited, as the reimbursement is not a cash transaction, but rather a transfer from a liability account (Petty Cash) to an expense account. No expenses are recorded in the reimbursement entry itself, as they were already recorded when the petty cash was disbursed.

When Reimbursing the Petty Cash Fund