What is petty cash?
submitted by Waqar

Pete

Petty cash is literally cash that a business keeps around for small expenditures. It's also called, "cash on hand," which is a little more descriptive.

If a business takes cash payments they need to have cash on hand to make change. Another example could be a parking lot fee. If you go to an important meeting with a client and you have to pay for parking, it makes sense to pay that out of cash. When you get back to the office you fill out a petty cash slip so you can be reimbursed.

Jong

It is a small-type of expenses in the area/field where the Affiliates/Subsidiaries have to expend a penny in order not to hamper the Operations.- is a small business transactions or economic activities of the branch's operations, seeking for an immediate purchased usually of little value for optimum utilization and continued Operations.- Usually, the establishment that infuses a capital (i.e. more than one billion pesos), they should established a fund, called Petty Cash Fund - Area for Php 100,000.00, subject for replenishment.- Petty cash expenses are performed by the auditee (preparer) subject for final liquidation. Meaning, all purchases subject for refund should be supported with the appropriate invoices and in accordance with the Company policies

Wesson

Petty cash is usually a little bit of cash kept on hand to cover minor expenses. These would be expenses that don’t warrant writing a check or going through the regular accounts payable process.

It's a little slush fund for small costs, like buying some pens, stamps, or donuts. It's usually managed by a specified person, otherwise employees would dip into it for lunch expenses all the time. Whoever is in charge needs to track of all the expenses with receipts and a petty cash log.

Petty cash helps a company deal with the small stuff without cluttering up the main accounts. You don't want to put paperclips in accounts payable, right?

It's really important to keep those receipts though. Because it's sort of a catch all for small purchases, and it's just non-trackable cash, it's easy for people to grab it and misuse it. As long as those records are kept neat, the manager would know immediately if any of it walked off.

When you need to refill your petty cash, you submit all the receipts and write a check write a check to bring the total back to its original amount. Simple, but effective.

M Thatcher

Petty cash involves cash handling, so it’s crucial for businesses to have controls like limiting the amount kept on hand and having a specific person in charge. Requiring receipts is an absolute must. It helps you avoid embezzlement, albeit in small amounts. If you keep an eye on the petty cash log, you can find discrepancies early.

On the accounting side, petty cash is recorded as a current asset, and each disbursement is tracked through journal entries that reflect the expenses paid out. When reconciled, the petty cash fund should match the amount of cash remaining plus the total of all receipts.