A petty cash fund is established to pay small, on-the-spot purchases such as office supplies, postage, or minor expenses. It is not meant for large nonrecurring expenses. It typically has one custodian who is responsible for managing the fund and making sure that it is used appropriately. Petty cash transactions are usually done in cash, not by issuing checks.

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A Petty Cash Fund

Question 131

Multiple Choice

A petty cash fund:

A) is established to pay large nonrecurring expenses.
B) is established to pay on-the-spot minor purchases.
C) should have a least two custodians.
D) should issue checks for certain purchases.

Correct Answer: