In a petty cash arrangement, which statement is true about payments?

• A. Every payment is supported by a petty cash voucher
• B. No documentation is required for petty cash payments
• C. Petty cash payments do not affect the general ledger
• D. Petty cash is never replenished

Answer: (A)

Petty cash is an imprest fund used for small, day-to-day expenses, and every payment from that fund must be backed by a voucher. The voucher records who was paid, the amount, the date, and the purpose of the expense, which creates an audit trail and helps control spending. When you replenish the fund, you use the total of the vouchers to debit the appropriate expense or supplier accounts and credit the cash/bank to restore the fund back to its fixed imprest amount. This is why the statement that every payment is supported by a petty cash voucher is correct.

The other ideas aren’t accurate: there is documentation required for petty cash payments, petty cash transactions do affect the general ledger when expenses are recorded and the fund is replenished, and the fund is replenished to maintain the imprest balance.