Petty Cash

Petty Cash (Definition)

Petty cash is a small amount of cash kept on hand to pay for minor expenses.

Key aspects of petty cash include:

1. Used for small, day-to-day expenses that are impractical to pay by check or credit card
2. Typically managed using an imprest system, where the fund is replenished to a fixed amount
3. Requires documentation (receipts) for all expenditures
4. Usually managed by a designated custodian
5. Subject to periodic audits to ensure proper use and prevent fraud
6. Amount kept as petty cash varies based on business needs and frequency of use
7. Understanding petty cash management is important for maintaining financial control over small expenses

Proper management of petty cash helps maintain accurate financial records and control over minor business expenses.