A petty cash fund is used in business for paying small expenses.

• A. For paying large invoices
• B. For paying small expenses
• C. For payroll
• D. For debt repayment

Answer: (B)

Petty cash is a small amount of cash kept on hand to handle minor, everyday expenses that would be inefficient to pay through checks or the formal purchasing process. It speeds up small purchases like postage, office supplies, or minor reimbursements, with receipts used to justify and replenish the fund later. That purpose fits best with paying small expenses.

Large invoices require the accounts payable system, payroll is handled separately by payroll processing, and debt repayments use designated debt or loan accounts. So the petty cash fund isn’t meant for those.