Final answer:
A petty cash fund is an asset reported on the balance sheet and is used for minor business expenses such as low-cost supplies and shipping fees. It is not used to record sales and is not an expense on the income statement.
Step-by-step explanation:
To review the statements provided and select the ones that accurately describe a petty cash fund, consider the nature of petty cash in the context of business accounting. A petty cash fund is indeed an asset reported on the balance sheet, as it consists of a small amount of cash on hand that is used for minor and incidental expenses within a business. It is not an account used to record sales of any size. Instead, it is indeed established to pay for small payments such as low-cost supplies and shipping fees, reflecting its purpose in managing day-to-day operational expenses that are not practical to pay through checks or credit. Lastly, a petty cash fund itself is not an expense reported on the income statement; however, the expenses paid out of the fund will be recorded as expenses when the fund is replenished.
A petty cash fund is an account used to record small sales and is established to pay for small payments like low-cost supplies and shipping fees. It is an asset reported on the balance sheet and is considered an expense reported on the income statement. Petty cash funds are usually set up to cover small daily expenses that occur in a business.