Which fund is used to cover small incidental office expenses such as postage?

• A. Accounts payable
• B. Cash on hand
• C. Petty cash
• D. Revenue

Answer: (C)

Petty cash is a small, dedicated fund set aside to cover minor, everyday office expenses such as postage. By using a petty cash fund, the organization can pay small costs without writing checks or processing full accounts payable for every little item. A custodian handles disbursements with petty cash vouchers, and when the fund is replenished, receipts are used to bring it back to its fixed amount. This provides quick, controlled access to minor purchases while maintaining accountability. In contrast, accounts payable is money owed to suppliers, revenue is income earned, and cash on hand is the total cash available, not a designated fund for small expenses.