What is petty cash?
Definition of petty cash
Petty cash is a small amount of physical cash belonging to a business and kept on its premises.
Typically, petty cash will be used for small incidental office costs, such as buying milk, tea and coffee for staff, or postage stamps to send business letters.
One or more members of staff will have keys to the box where the cash is kept, and will record money given to colleagues from the box on petty cash slips. They will also keep a record of cash put into the box, which is usually withdrawn from the company’s bank account via a cash machine.
The amount of money in the petty cash box will be recorded in a business’s accounts. This is a current asset account, because it’s money that the business owns.