Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Petty Cash

Financial Accounting

6. Internal Controls and Reporting Cash

Petty Cash

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Multiple Choice

Which term best describes an amount of cash kept on hand and used for making small payments?

Accounts receivable

Petty cash

Cash equivalents

Imprest fund

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Verified step by step guidance

Understand the concept of 'petty cash': Petty cash refers to a small amount of cash kept on hand by a business to cover minor expenses or small payments, such as office supplies or employee reimbursements.

Review the other terms provided in the options: 'Accounts receivable' refers to money owed to a company by its customers for goods or services provided on credit. 'Cash equivalents' are short-term, highly liquid investments that can be quickly converted into cash. 'Imprest fund' is a system used to manage petty cash, where a fixed amount is maintained and replenished as needed.

Compare the definitions: The term 'petty cash' specifically matches the description of cash kept on hand for small payments, while the other terms do not fit this purpose.

Recognize the correct answer: Based on the definitions, 'petty cash' is the term that best describes the scenario outlined in the question.

Apply this understanding to similar problems: When encountering questions about small cash reserves for minor expenses, remember that 'petty cash' is the appropriate term.