Question

You oversee the $250 petty cash for your company. When an employee needs a special item that is not in inventory, you take money from petty cash to purchase that item.

One day, you are short on cash for lunch. You decide to borrow $10 each day for the next 3 days until payday for a total of $30 from petty cash. After payday, you do not have enough to repay petty cash, so you decide to record a cash short/over expense of $30.

Respond to the following in a minimum of 175 words:

• Since this is the first time you have ever done this, is this a problem?
• If so, what steps should be taken to fix this problem? If not, why not?

Answer 1

ANSWER:

It is clearly an issue as financing the individual costs from petty cash or drawing from petty cash and unfit to reimburse at required time can imbalance the petty cash immediate needs of the organization and different random costs, regardless of whether it is first time or tenth time, the thing which matters is that it can hurt the short term liquidity needs of the firm and asserting it as a money short/over expense will be considered as absence of internal control and inappropriate petty cash management. The employee may then consider it to be an open greeting to keep taking a couple of dollars.

The means to be taken to fix this issue are :

1. By fixing the reins on who has the accessibility to petty cash.

2. Give one trusted worker duty regarding dispensing and dealing with the cash.

3. Set up a proper bookkeeping framework to track the petty cash.

4. At whatever point, a worker or staff demands disbursements, he ought to clarify in detail what the cash is for and afterward turn in a receipt alongside any change once the buy is made.

5. The worker accountable for petty cash should log the details in a record.

6. At that point reconcile the distinction and keep the receipt in a protected spot.

Note :-

If you have any doubt about this answer please ask me in comment box . i will try to clarify your doubt. but please don't give thumb down.

THANK YOU.