The check written to establish the petty cash fund is recorded in the journal by crediting Cash and debiting Petty Cash.TRUE.Petty cash is a small amount of cash on hand used for paying expenses too small to merit writing a check. Learn how to balance petty cash in accounting.
Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque, because of the inconvenience and costs of writing, signing, and then cashing the cheque. A petty cash fund is a small amount of company cash, often kept on hand (e.g., in a locked drawer or box), to pay for minor or incidental expenses, such as office supplies or employee reimbursements.
Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs. Examples of these payments are office supplies, cards, flowers, and so forth. Store micro cash in the closet or micro cash drawer where you need it most. Small amounts of cash are also important because having a small amount of cash on hand for business expenses means you don't have to put your hands in your own pocket. Instead, it can handle urgent needs with relative ease. But most importantly, the likelihood of leaks is very high at regularly low rates.
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