In short
Petty cash is a small imprest fund kept on hand for minor payments. A custodian keeps receipts, and when the fund is replenished, the expenses are recorded and cash is restored to the fixed amount.
Key takeaways
- The petty cash account itself changes only when the fund's size is increased or decreased.
- Differences between the receipts and cash missing go to cash over and short.
- Unreplenished receipts at year-end should be recorded as expenses.
Where it's tested
FAR: Cash, Receivables & Bad Debts — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Which item is properly included in cash and cash equivalents?