What is a Petty Cash account ?

When a company has lot of small, recurring expenses that need to be paid right away in cash, A petty cash account is set up. Examples of small expenses are to buy stamps, give tips, buy newspapers or magazines or buy a computer power cord etc. A fund of $100 may be set up and used until almost gone and then re set up for $100. You might establish this fund by writing a check to the fund, and noting on the check that it goes to the "petty cash" fund. For internal control you will withdraw from the fund by filling out a voucher that describes who took the money, how much, for what purpose and on what date. The accountant will then use the information on the petty cash slip to categorize the expenses for the financial statements.