Final answer:
Petty cash is listed as a current asset under the cash and cash equivalents category on a balance sheet. It's similar to a bank's cash reserves on a balance sheet and is used for small, immediate expenses.
Step-by-step explanation:
Petty cash is a small amount of cash on hand used for paying expenses too small to merit writing a check. On a balance sheet, petty cash is listed as a current asset under the cash and cash equivalents category. Just like the case with a bank's balance sheet, where cash held in vaults is considered an asset, petty cash held by a company is also an asset because it serves a similar purpose – it is available funds that the company can use immediately.
On the detailed bank balance sheet, other forms of cash assets may include reserves held at the Federal Reserve and monies that the bank can access quickly. However, petty cash is specifically used for minor and immediate expenses without the formality of issuing a check.