What are examples of petty cash? (2024)

What are examples of petty cash?

Petty cash is a small amount of money a company keeps for small, incidental expenses. These minor payments include office supplies, stationery, meals, client lunch, stamps, etc. The number of petty cash funds could change depending on the organization's size.

Petty cash refers specifically to money—literally, coins and bills—that a company keeps on hand for small outlays, usually because using cash is easier than using a check or credit card. Cash on hand is any accessible cash the business or liquid funds have.

In enterprises, each department may have its petty cash fund allocated. The petty cash balance sheet is also classified under current assets in the balance sheet due to its high liquidity. As assets are ordered by liquidity, petty cash, being easily accessible, is positioned near the top of the petty cash sheet.

Along with a regular cash book, most companies maintain a separate petty cash book to record small and daily expenses like food, fuel, office supplies, electricity, postage, newspaper, travel, etc. The person responsible for recording these transactions is called a petty cash cashier.

Petty Cash Examples

Transportation Expenses: Covering small transportation costs such as bus fares, parking fees, or tolls for employees running errands for the company. Miscellaneous Expenses: Paying for small miscellaneous expenses like postage stamps, small repairs, or quick fix-it items.

a) State allowable expenses

For example, small expenses such as postage stamps, office expenses, parking, etc., can be paid using petty cash. Ensure you also set a limit within which the expenses can be made.

Debit cards or gift cards

One alternative to petty cash funds is a debit card or Visa gift card. Like a cash fund, this requires putting a small amount of money onto the card and then appointing a custodian to oversee the use of the card.

Petty Cash Funds may not be used for personal loans, reimbursem*nts of purchases made on personal credit cards or debit cards, travel expenses, or taxes for which the University is not liable (e.g. sales tax, freight taxes, or federal excise taxes).

Such businesses often make changes for customers, or they may entrust employees to solve problems by making individual purchases. Thus, even for businesses that don't make transactions with customers, petty cash can still be useful.

Who has control over petty cash?

Local petty cash custodians are responsible for safeguarding petty cash funds and maintaining receipts and detail records to support all transactions.

The negative balance/amount in the Petty Cash Fund account normally occurs when there is a credit balance. This happens when a business use funds for expenditures more than it has on hand. You'll want to review the transactions in the account to ensure that everything is recorded accurately.

Petty cash is a small amount of money kept on hand for the purpose of making small payments such as office supplies, postage, and other small expenses. It is usually kept in a locked box and is reimbursed periodically.

Administering Petty Cash and Cash Drawer Accounts

The receipts should contain the date, name of individual receiving cash, amount of cash and business purpose. Funds should not be used for personal expenses.

The nominal amount stored in the form of cash which an organisation deems petty will vary across companies. However, most organisations maintain a petty cash reserve in the range of Rs 5,000 to Rs 20,000. The following are some of the transactions for which petty cash is made use of: Office stationeries.

Petty cash is a current asset. Current assets are assets that provide economic benefit within one year. Since petty cash funds can resolve scenarios with readily available cash, this can be considered as providing economic benefits.

Examples of Petty Cash Payments

Some examples of small payments made from petty cash include: Paying the mail carrier 30 cents for the postage due on a letter. Reimbursing an employee $9 for supplies purchased. Reimbursing an employee for purchasing $14 of bakery goods for an early morning meeting.

What should petty cash not be used for?

Petty cash should not to be used as an operating fund, i.e., to pay invoices for goods or services, to pay salaries or wages, or to make advances or loans.

The amount in petty cash can vary between ₹ 5000 and ₹ 20,000. The actual amount of cash varies based on the size of the branch and the petty cash transactions (frequency). Generally, it would help if you appointed a cashier and a custodian responsible for the petty cash fund.

General Information on Petty Cash

Purchases with Petty Cash are limited to $100 per vendor per day. A Petty Cash fund should be replenished either monthly or when accumulated receipts total $200 – whichever occurs first. The types of purchases allowed to be made with a Petty Cash fund are extremely limited (see below).

The purpose of a petty cash fund is to provide business units with sufficient cash to cover minor expenditures. The intent is to simplify the reimbursem*nt of staff members and visitors for small expenses that generally do not Exceed $25.00, such as taxi fares, postage, office supplies, etc.

Nearly all retailers provide card payment facilities, and very often there is no minimum spend limit. So, it makes sense to eliminate petty cash by using a prepaid Expend employee card to help colleagues manage company purchases on your behalf.