Petty Cash

Petty cash refers to a modest sum of money that an organisation reserves for covering minor or incidental expenses. It is considered part of the general cash account and is classified as a current asset on the balance sheet. Establishing a petty cash fund involves issuing a check to the petty cash custodian, who is responsible for safeguarding the cash and providing receipts or vouchers for any expenses paid from the fund. The check amount is not treated as an expense but as a cash transfer. When replenishment is necessary, the custodian submits receipts or vouchers to the accounting department, which then records the expenses in the general ledger. Typically ranging from ₹10,000 to ₹30,000, the petty cash amount varies based on the size and requirements of the organisation.