Petty cash refers to a small amount of physical/tangible cash that is kept by a business for small expenses. These expenses generally include purchases like refreshments, postage, subsistence and minor stationery expenses. The cash is generally kept on the business premises or in the owners pocket (if a tradesman).
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Petty cash is usually recorded with greater accuracy when receipts are kept for purchases and petty cash slips are used. Petty cash slips are a voucher containing information (usually hand written & signed), on who took the money, what they purchased, how much was spent, and other notes. These vouchers can be used also when
money is paid into petty cash to increase the amount in petty cash or bring to float.
From my experience, in small businesses, petty cash is often not accounted for accurately. This adds to the workload of the year end accountant, which normally increases fees and can provide inaccurate management records.