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Hallo,
I don’t understand the solution to this example, why the credits were higher by 10 than the debits, isn’t it the opposite and in which account does this occur, the petty cash a/c, the cash a/c, or in the Trial Balance?
An organisation restores its petty cash balance to $250 at the end of each month. During October, the Total expenditure column in the petty cash book was calculated as being $210, and the imprest was 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 beSolution:
The cash book was credited with $210 reimbursement of petty cash. However, the nominal ledger was posted with only $200 of expenditure debits. Therefore the credits are $10 higher than the debits.Thank you!
The double entry when cash at bank is used to increase petty cash is:
Dr Petty Cash Cr Cash
Here they have debited cash with the correct amount of 210 but they have only credited petty cash with the amount in the analysis column of 200
So the debits are 10 more than the credits.
Yet again, this is a very poor example from your book. I do not know which book you are using, but you would be much better getting a current edition of a Revision Kit from one of the ACCA approved publishers.
Hallo,
They give as correct answer B – the trial balance being $10 higher on the credit side, but I was going to give A, B makes no sense to me, why B?
Thank you!
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