Asked by Markayla Eakins on Jul 16, 2024
Verified
The entry to replenish the petty cash fund debited Insurance Expense for postage. This would cause:
A) Petty Cash to be overstated.
B) Cash to be understated.
C) Postage Expense to be overstated.
D) Insurance Expense to be overstated.
Insurance Expense
The cost associated with purchasing insurance policies for the business, considered an operating expense.
Postage Expense
The cost incurred by a business to send mail or packages, recorded as an expense in the business's financial statements.
- Identify suitable accounting entries for operations linked with petty cash, particularly for replenishment and adjustments.
Verified Answer
ML
Maddie LivvixJul 20, 2024
Final Answer :
D
Explanation :
When Insurance Expense is debited instead of Postage Expense, it results in Insurance Expense being overstated because the expense recorded does not accurately reflect the nature of the transaction.
Learning Objectives
- Identify suitable accounting entries for operations linked with petty cash, particularly for replenishment and adjustments.