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An organisation restores its petty cash balance to $250 at the end of each month. During October total expenditure column in the petty cash book was calculated as being $210, and the impress restored by this amount. The analysis columns posted to the nominal ledger totalled only $200
Which one of the following would this error cause?
A The trial balance being $10 higher on the debit side
B The trial balance being $10 higher on the credit side
C No imbalance in the trial balance
D The petty cash balance being $10 lower than it should beThe answer is B but im not sure why it is not A because doesn’t this mean there is $10 more on the debit side than the credit side?
I think this is an unfair question to have been asked.
Given that the analysis columns totalled 200 it is really meaning that the total expenditure was wrong and should have been 200 and not 210.
So the balance in petty cash will only have been credited with 200 (when it should have been 210) which means that the credits are too low and therefore the debits too high.
It is really not a fair question because it very much depends whether they have a separate nominal ledger account for petty cash or not.
thankyou but why is the petty cash book credited with the reimbursement? i thought its an asset account so debit = money in.
The petty cash book is not credited with the reimbursement – I did not say that, and neither did the question, so I don’t know why you are saying it! 🙂
The entry for the reimbursement is to Dr Petty cash: Cr Cash at Bank.
I suggested that you watch our free lectures which cover the whole of the syllabus for F3. Have you watched them?
it says that the impress was restored by this amount $210 i think im assuming that they did it correct but the actual answer is that it was posted as 200 to the petty cash debit side
I guess then they must have meant that the analysis column in the main cash book was entered as 200 instead of 210.
However I still think that it is a terribly unfair question because it is so badly worded.
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