Dictionary of all accounting terms
Petty cash is a relatively small amount of cash that businesses, organizations or institutions set aside for reimbursements on small purchases made by employees of the business.
The purchases made using petty cash are just too small to be put through the rigorous purchase and reimbursement procedures common in most companies. That's why they keep a small fund for quick small expenses that are relatively insignificant.
Petty cash may range from $50 - $200, depending on the organization. Petty cash is normally used for:
Normally, there is a petty cash custodian who is in charge of managing the petty cash fund and ensuring its proper usage.
When the funds are low for the petty cash fund, the petty cash custodian will ask for a check to be chased to replenish the amount that has already been paid out.