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.

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  1. Where do companies keep their cash?

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  2. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  3. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  4. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  5. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
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