NOCTI Accounting Foundations Practice Test

Petty cash is typically kept as an imprest fund, meaning it’s meant to stay at a fixed balance. Replenishment restores that fixed amount by recognizing the actual expenses paid out of petty cash. When you replenish, you debit the specific expense accounts for what was disbursed (for example, office supplies, postage, or miscellaneous expenses) and you credit Cash for the total amount withdrawn to bring the petty cash fund back to its original level. If the receipts don’t add up to the cash withdrawn, you record the difference in Cash Short/Over to reflect any discrepancy. This process ensures expenses are charged correctly and the petty cash fund is maintained at its set amount. The other options don’t fit the procedure: using a new petty cash voucher each time misrepresents how replenishment works, and moving funds from Accounts Receivable or debiting Interest Expense isn’t how petty cash replenishment is funded or recorded.