Question

Which method is used to avoid the time and cost of writing checks for business expenses that are small in amount and is controlled by limiting the amount in it and subjecting it to surprise audits?

1) Credit card
2) Debit card
3) Petty cash
4) Bank transfer

Answer 1

The method used to manage small business expenses efficiently is the petty cash system, which is controlled through limits and audits. Credit cards and debit cards are ways to access funds or take loans, not to manage small expenses.

Step-by-step explanation:

The method used by businesses to manage small expenses without the time and cost of writing checks is the petty cash system. This system involves setting aside a small amount of cash in a petty cash fund that can be used for minor and incidental expenses. To control this fund, businesses limit the amount of money available and perform surprise audits to ensure the funds are being used appropriately.

Credit cards and debit cards are also methods of payment, but they do not alter the quantity of money in the economy. They are simply different ways to access funds in a checking account or take a short-term loan, respectively. A smart card, on the other hand, has stored value but is often limited to specific purchases or locations.