Which of the following is a typical control for petty cash?

• A. A monthly budget that covers all petty cash expenditures.
• B. A public ledger that records petty cash transactions in real time.
• C. A fund custodian who handles receipts, reconciliation, and replenishment.
• D. An automatic replenishment without receipts.

Answer: (C)

Effective petty cash control relies on designating a fund custodian who handles receipts, reconciliation, and replenishment. Having a single responsible person ensures accountability for every disbursement, keeps proper records, and makes it easier to track the fund’s balance against the float. Receipts for all expenditures are collected and reviewed, the custodian reconciles the actual cash on hand with the recorded transactions, and replenishment is sought only after verifying what was spent. This arrangement enforces separation of duties and provides an auditable trail, which are core to preventing misuse and errors in small cash funds. That’s why this is the typical control. A monthly budget helps with planning but doesn’t by itself enforce day-to-day control of the physical fund. A real-time public ledger for petty cash isn’t a standard practical control and can raise security concerns. Automatic replenishment without receipts removes the verification step, greatly increasing opportunities for appropriation or error.