Petty Cash


DEFINITION of 'Petty Cash'

A small fund of cash kept on hand for purchases or reimbursements too small to be worth submitting to the more rigorous purchase and reimbursement procedures of a company or institution. Petty cash funds must be safeguarded and documented to ensure that thefts do not occur. Often a custodian for the funds is appointed who is held responsible for any shortfall or lack of documentation of petty cash.


To prevent theft, it is commonplace to require strict documentation of any use of petty cash. For example, use of petty cash may require the employee to complete a form checking out the funds and subsequently submit a receipt for purchases and return any extra change. Alternatively, employees may be asked to make purchases themselves and then get reimbursed from the fund after an expense report is submitted. Petty cash funds must be periodically audited to ensure that the balance of the fund is correct.

  1. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
  2. Denomination

    A classification for the stated or face value of financial instruments, ...
  3. Cash Commodity

    In futures trading, the cash commodity is delivered for payments. ...
  4. Cash Price

    The actual amount of money that is exchanged when commodities ...
  5. Cash Position

    The amount of cash that a company, investment fund or bank has ...
  6. Cash

    Legal tender or coins that can be used in exchange goods, debt, ...
Related Articles
  1. Economics

    What Is Money?

    It's a part of everyone's life, and we all want it, but do you know how it gains value and how it is created?
  2. Professionals

    Career Advice: Accountant Vs. Financial Planner

    Identify the key differences between a career in accounting and financial planning, and learn how your personality dictates which is the better choice for you.
  3. Economics

    Calculating Days Working Capital

    A company’s days working capital ratio shows how many days it takes to convert working capital into revenue.
  4. Professionals

    Career Advice: Accountant Vs. Controller

    Learn about the differences between controllers and accountants, how the two are related and which is the best career choice for aspiring bookkeepers.
  5. Professionals

    What is Cash Basis Accounting?

    Cash basis accounting recognizes revenues and expenses at the time cash is paid or received.
  6. Entrepreneurship

    What's a Good Profit Margin for a Mature Business?

    How to determine if the amount you clear dovetails with the competition.
  7. Economics

    Understanding Explicit Costs

    Common examples of explicit costs include wages, utilities, rent, raw materials, and other direct expenses companies pay to conduct business.
  8. Professionals

    Career Advice: Accounting Vs. Bookkeeping

    Learn the nuances that separate the similar careers of accounting and bookkeeping, and identify which is better for you based on your skills and career goals.
  9. Investing

    How Shackling Offshore Banks Will Impact You

    FATCA regulations have cast a wide net on offshore banking activities, and many innocent account holders might get caught in its tangle.
  10. Economics

    How to Tax The Cloud: An Economic and Legal Riddle

    Various states have been trying to figure out how to tax cloud-based services, but they just might be opening an economic and legal Pandora's box.
  1. Where do companies keep their cash?

    If you have ever looked over a company's balance sheet, you have no doubt noticed the first account under the current asset ... Read Full Answer >>
  2. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  3. Do prepayments provide working capital?

    Prepayments, or prepaid expenses, are typically included in the current assets on a company's balance sheet, as they represent ... Read Full Answer >>
  4. Does working capital include salaries?

    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  5. What is a profit and loss (P&L) statement and why do companies publish them?

    A profit and loss (P&L) statement, or balance sheet, is essentially a snapshot of a company's financial activity for ... Read Full Answer >>
  6. How do dividends affect the balance sheet?

    Dividends paid in cash affect a company's balance sheet by decreasing the company's cash account on the asset side and decreasing ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  2. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  3. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  4. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  5. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  6. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!