Petty Cash Fund Flashcards, test questions and answers
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What is Petty Cash Fund?
Petty cash funds are an important part of any business, and it is essential to have a system in place to manage them effectively. Petty cash funds provide businesses with the ability to quickly access small amounts of money without having to go through the process of writing checks or dealing with banks. This can be extremely helpful in times when a business needs to make minor purchases that don’t warrant writing a check or using credit cards.The primary goal of a petty cash fund is to maintain accountability for all transactions made from it. All transactions should be properly documented and tracked, so that there is an audit trail if necessary. To keep track of all activity related to petty cash, businesses often use petty cash vouchers or logs. These documents help ensure that proper procedures are followed and all funds are accounted for at all times.When setting up a petty cash fund, it is important that the amount allocated for this purpose does not exceed what the business can reasonably afford. It is also important to establish protocols for who can access and withdraw from the fund, as well as procedures for reimbursing employees who may have used their own money while making purchases on behalf of the company. Additionally, businesses must pay close attention to how they document their expenses as this will help them determine whether they need additional funding or if they need to limit their spending in certain areas in order stay within budget constraints. Overall, managing a petty cash fund can be challenging but ultimately rewarding when done correctly due its convenience and cost savings potentials when making small purchases quickly and easily without having going through other more involved financial processes such as writing checks or using credit cards.