What is the term for cash that a business keeps for making small purchases?

The term for cash that a business keeps on hand for making small purchases is petty cash. Petty cash is used to cover minor expenses that arise in the day-to-day operations of a business, such as office supplies, postage, or small repairs. This fund allows for convenient access to money without the need for a formal check or approval process, streamlining small transactions that might otherwise slow down operations.

Petty cash is typically managed with a petty cash fund set up to maintain a specific amount, with receipts kept to document expenditures. When the fund runs low, it can be replenished through a formal reimbursement process, ensuring that the accounting records accurately reflect all spending.

The other terms refer to different financial concepts. Operating cash generally refers to the cash a business uses to fund its day-to-day operations beyond minor purchases. Emergency funds are reserved for unexpected expenses and are not typically used for routine purchases. Reserve capital refers to funds set aside for future investments or unplanned needs rather than everyday operational expenses.