What is a Petty Cash Book used for?

• A. Used to record low-value (petty) cash payments and list the transactions
• B. A ledger for recording long-term investments
• C. A summary of sales revenue
• D. A register of fixed assets

Answer: (A)

A Petty Cash Book is used to record small, routine cash payments from a petty cash fund. It logs each minor expense as it happens, noting date, payee, purpose, and amount, so there’s a clear running record of where the cash went. This supports cash control and makes reconciliation easier, especially when the fund is kept at a fixed level in an imprest system—the total of disbursements is replenished to restore the original float. This setup is ideal for everyday small costs like stamps, office supplies, or taxi fares, providing a straightforward audit trail for minor expenditures. Other records like long-term investments, a summary of sales revenue, or a fixed assets register track different aspects of the business and don’t capture these small on-hand expenditures.