What is the typical amount of money maintained in a petty cash fund for most small to medium-sized businesses?

• A. \$5,000 to \$10,000
• B. \$1 to \$10
• C. \$10,000 to \$50,000
• D. \$50 to \$500

Answer: (D)

Verified step by step guidance

1. Understand the concept of a petty cash fund: A petty cash fund is a small amount of money kept on hand to cover minor expenses that are impractical to pay by check or electronic transfer, such as office supplies or employee reimbursements.
2. Recognize the typical range for petty cash funds: For most small to medium-sized businesses, the amount maintained in a petty cash fund is generally modest, as it is intended for small, incidental expenses.
3. Compare the given options: Analyze the ranges provided (\$5,000 to \$10,000, \$1 to \$10, \$10,000 to \$50,000, and \$50 to \$500) and determine which range aligns with the typical purpose and usage of petty cash funds.
4. Identify the correct range: Based on the purpose of petty cash funds, the range of \$50 to \$500 is most appropriate for small to medium-sized businesses, as it provides enough money for minor expenses without being excessive.
5. Conclude the reasoning: The correct answer is \$50 to \$500 because it reflects the practical and typical amount maintained in a petty cash fund for businesses of this size.