An expense occurs when the company pays the postal carrier for the postage that is due on the incoming mail. Another expense occurs when the company sends an employee to pick up some needed supplies. If these expenses are paid with money in the petty cash fund, the currency and coins held by the petty cash custodian will decrease and in place of that money the custodian will have petty cash receipts or petty cash vouchers. The expenses will be recorded in the general ledger when the petty cash fund is replenished.
In order to get the expenses entered in the proper accounting period, it is necessary to replenish the petty cash fund at the end of each accounting period. (This is done in addition to replenishing the fund whenever the currency and coins are low.)
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