What is the maximum petty cash limit for over-the-counter purchases?

• A. 500 dollars
• B. 1000 dollars
• C. 250 dollars
• D. 750 dollars

Answer: (A)

Petty cash is kept for quick, small purchases that don’t justify a formal procurement process. Setting a limit on each disbursement keeps the fund manageable and easy to reconcile, while still allowing staff to buy common items locally. Five hundred dollars is chosen because it strikes a balance: it covers many routine needs, minimizes cash on hand to reduce loss risk, and keeps the process simple with receipts and a petty cash voucher for accountability. Larger limits would raise exposure to loss and require tighter controls, while smaller limits would slow purchasing and increase the number of transactions needed to replenish the fund.