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GCE Financial Accounting 1989 Question 5

Question 5

Petty Cash

The Petty Cash Book can have

  1. A.a debit balance only
  2. B.a credit balance only
  3. C.both debit and credit balances
  4. D.a debit or nil balance.
  5. E.a nil balance only
Show the answer and explanation

Answer: A (a debit balance only)

Explanation

Petty cash is money in hand, so it can never be overdrawn: its balance is a debit (cash still in the box), never a credit.