Petty Cash

The principal method for maintaining internal control of cash is using a checking account. However, a business usually has minor expenses, such as postage or minor purchases of supplies that are easier to pay for with currency rather than with a check. To handle these minor expenses, a petty cash fund is set up. A small amount of money, like $100, is placed in a petty cash box or drawer and an individual is given responsibility for the funds. This individual is the petty cashier. When money is needed for an expense, the cashier prepares a Petty Cash ticket, which shows the date, amount, and purpose of the expense and includes the signature of the person receiving the money. This ticket is then placed in the petty cash box. At any time, the total amount of cash in the box plus the total amount of all tickets should equal the original fixed amount of cash originally placed in the box. As expenditures are made, the petty cash fund will eventually need to be replenished. This is usually done by writing a check to bring the amount in the fund back to the original amount of $100.