petty cash control why is it a debit

bonnie
bonnie Registered Posts: 30 Regular contributor ⭐
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!

Comments

  • Clintm15
    Clintm15 Registered Posts: 248 Dedicated contributor 🦉
    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.
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  • crispy
    crispy Registered Posts: 465 Dedicated contributor 🦉
    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
    crispy Registered Posts: 465 Dedicated contributor 🦉
    Posted answer at exact same time as Clint. A good sign that we have given the same answer :)
  • bonnie
    bonnie Registered Posts: 30 Regular contributor ⭐
    Thanks for your help both of you!
  • gemma89
    gemma89 Registered Posts: 43
    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.
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