What is the purpose of a petty cash fund?

• A. Frequent large orders
• B. Employee payroll
• C. Marketing campaigns
• D. Relatively infrequent and low-cost purchases

Answer: (D)

Petty cash is a small cash fund kept on hand to pay for minor, low-cost items that come up quickly and don’t warrant the formal approval and processing of a purchase order or check. This setup helps staff move fast for small expenses like postage, office supplies, or minor maintenance while keeping a simple record through receipts. It isn’t meant for large orders, payroll, or marketing campaigns, which require larger sums and more formal processes. A custodian manages the fund, collects receipts, and replenishes the cash to its original amount as needed, ensuring proper accountability.