Definition of Petty Cash
What does the term "petty cash" mean? What is the definition of the term "petty cash"?
The term "petty cash" refers to the small amount of money that a business will usually keep on hand for the purposes of either:
a) providing change to customers
b) purchasing small items that the business may need
For instance - XYZ Insurance, Inc. may keep an envelope filled with $200 in the back room that is used for "petty cash". This could be used for small expenditures such as new coffee filters or paper towels, or the cash could be used to provide change to customers in case the business runs low.
"Petty cash" is normally refilled on a consistent basis. For instance, many companies will have a set amount of money that is earmarked for "petty cash", such as $100 or $200.
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