The closing balance of petty cash book is considered as_________?
Correct answer: B. Asset
- A. Liability
- B. Asset
- C. Expenses
- D. Income
Explanation
The petty cash balance represents cash still held by the business, so it is a current asset. Petty cash payments are expenses, but the closing balance itself is not an expense.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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