What is a common use for a petty cash fund in a business?

A petty cash fund is commonly utilized for handling minor daily operating expenses within a business. This type of fund is a small amount of cash that organizations keep on hand to pay for incidental expenses that arise during regular operations.

For example, petty cash may cover costs such as office supplies, minor repairs, or small travel expenses that do not warrant going through formal purchase orders or checks. It simplifies the process of managing everyday costs and allows for quick, flexible responses to small needs without extensive documentation.

While conducting payroll transactions typically involves larger sums and more formal accounting procedures than what would be handled via petty cash, managing investments in new projects and covering unexpected large expenses are not suitable uses for petty cash due to their complexity and significance, which require more formal financial processes.