Final answer:
The correct option is A). Cash set aside for small business expenses when a check is not suitable is known as petty cash. This fund is used for minor, miscellaneous expenses and it is replenished periodically after accounting for the expenditures.
Step-by-step explanation:
Cash that is set aside to purchase small items for the business when a business check is not available is called petty cash. This is a small amount of cash on hand that is used for paying expenses too small to merit writing a check. Setting up a petty cash fund involves deciding on the amount of petty cash called a fund size, getting the cash from the bank, and storing it in a secure location, often in a lockbox or a drawer with a lock.
The petty cash system is important for the day-to-day operations of a business as it improves efficiency by saving time and reducing the paperwork associated with writing checks for minor, miscellaneous expenses. Examples of expenses that might be covered by petty cash include postage due, office supplies, or minor repairs. At regular intervals, the petty cash fund is reconciled and replenished, which involves accounting for the expenditures and adding new cash to restore the fund to its original level.