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At the end of the month, the petty cash ledger shows a closing balance of $140. The petty cash count reveals a balance of $131 cash in hand.
Which transaction would explain the discrepancy?
A. A petty cash receipt of $9 was omitted and not recorded in the petty cash ledger
B. A petty cash expense voucher for $56 was entered in the petty cash ledger as $65
C. A sales manager has not claimed $9 incidental travelling expenses he paid for personally.
D. An employee petty cash voucher for $1 was reimbursed wrongly for $10
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The correct answer is D.
There would be a reimbursement of $9 more than the correct amount, leading to the balance in the petty cash in hand being lower than the balance recorded in the general ledger.
The omission and transposition errors will lead to the petty cash ledger having a lower balance.
The sales manager’s travelling expenses will not cause an imbalance as the transaction has not been recorded anywhere.
Please explain this in simple words.An employee should have been paid $1 but was in fact paid $10.
The correct amount (I.e. $1) was entered in the account, but since they have paid out $10 the cash in hand is $9 less than it should be.
I assume this is again a Paper FA1 question, and you must ask FA1 questions in the FA1 forum.
(Also, which exam are you actually studying for? You have been asking questions on many different exams over the last few years 🙂 )
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