Petty cash is a small amount of money that businesses keep on hand for minor, everyday expenses. The petty cash fund is usually kept in a lockbox or drawer, and only the business owner or designated accounting staff have access to it.
To set up a petty cash fund, businesses will typically write a check to themselves for the desired amount. They will then use this check to withdraw cash from the bank and bring it back to the office. Once the petty cash is in the office, it can be used to reimburse employees for small expenses like office supplies or parking meters.
When an employee needs to be reimbursed from petty cash, they will submit a request form to the accounting department with receipts for their expenses. The accounting department will then reimburse the employee from the petty cash fund and keep track of all expenses.
At the end of each month, the accounting department will reconcile the petty cash fund to make sure that all expenses have been accounted for. They will also replenish the fund if necessary so that it is ready for the next month.