Which of the following is true about replenishing petty cash?

• A. True
• B. False
• C. It Depends On The Date
• D. Cannot Be Determined

Answer: (B)

Replenishing petty cash uses the imprest system, where the petty cash fund is kept at a fixed amount. As you spend from the fund, you record those disbursements as expenses and the petty cash balance decreases. When the fund gets low, you replenish by issuing a check for the total of the disbursements and debiting the petty cash account to restore it to the original level, with a credit to Cash (or Bank) for the same amount. The date does not determine when replenishment happens—the trigger is the fund’s remaining balance and the need to cover the recorded expenditures. So saying replenishment depends on the date is not accurate. For example, if 60 was spent, you would have already debited the appropriate expense accounts when the cash was spent, and when replenishing you would debit petty cash for 60 and credit cash for 60 to bring the fund back to its fixed amount.