Explanation

A petty cash fund is typically managed using an imprest system, which is a method of managing small amounts of cash.

Here's how it works:

• A fixed amount of cash is designated for petty cash (e.g. $100).
• The petty cash fund is replenished periodically (e.g. monthly) by withdrawing the exact amount of cash that has been spent, plus any additional amount needed to restore the fund to its original amount.
• All transactions are recorded in a petty cash log or journal.
• The fund is regularly reviewed and reconciled to ensure accuracy and prevent fraud.