What is the purpose of a petty cash fund in a business?

The purpose of a petty cash fund in a business is to cover minor business expenses. Petty cash is typically a small amount of cash that a business keeps on hand to pay for everyday expenditures that are too small to warrant writing a check or processing through the accounts payable system. This can include items such as office supplies, small repairs, or miscellaneous expenses that arise unexpectedly.

Having a petty cash fund allows for quick and easy transactions without the need for extensive documentation that larger purchases might require. This streamlined approach helps maintain smooth operations, especially for small expenses that can arise frequently in day-to-day business activities.