petty cash control why is it a debit

bonnie

Can someone explain why petty cash control is a debit?

I'm just working through trial balance question.

I can't work it out. Petty cash is a debit so I thought petty cash control would be a credit.

The same as a purchase is a debit and the control account is a credit.

Thanks!

Clintm15

Petty cash is a debit because cash is an asset. All asset accounts appear as debits.

Typical double entries will be;

DR Petty Cash
CR Bank account

This is the process of withdrawing cash to top-up the petty cash 'tin'.

DR Expense account
CR Petty Cash

This is for example, a member of staff using the petty cash to buy something, like stationery.

Credit purchases appear as debits in the expense accounts but the liability is held as a credit.
For example;

DR Expense account
CR Purchase Ledger

The debit will form part of the Profit and Loss statement and will be written off at year end. The credit is the amount owed to the supplier and will remain until is paid.

Hope this helps.

crispy

Hi,

I would think it is because they are the same thing. At period end, you would reconicle the figure on the Petty Cash Control Account to the actual physical cash held to prove out the balance and investigate any differences.

The petty cash control account would summarise all transactions involving petty cash eg:

For cash expenses:
Dr Expense A/c
Cr Petty Cash Control

When putting cash from Bank into the Petty Cash tin:
Dr Petty Cash Control
Cr Bank

crispy

Posted answer at exact same time as Clint. A good sign that we have given the same answer

bonnie

Thanks for your help both of you!

gemma89

So we debit where the money is being taken from and credit where the money is going?
I am trying to learn things that will help me remember which account to credit and debit as at the moment I just keep confusing myself.