A small cash fund for minor expenses — small, but still real bookkeeping.
Petty cash is a small physical cash fund kept for minor expenses — parking, a last-minute supply run, the pizza for a late crew. Small doesn't mean unrecorded: petty cash is a real asset account, and every dollar in or out gets documented.
The standard system is an imprest fund: fix an amount (say $200), spend against receipts, then replenish exactly what the receipts total — which simultaneously records the expenses. If the box and the receipts don't add back to $200, the shortage itself gets recorded. Undocumented petty cash is where small leaks — and audit questions — are born.
The $200 box holds $63 cash and $137 in receipts (supplies $92, parking $45). Replenishing writes a $137 check: supplies and parking expenses recorded, box back to $200, everything accounted for.
Chart of Accounts · Bank Reconciliation · Journal Entry — or browse the full plain-English glossary.
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