Which statement correctly describes advances from a change fund?

Which statement correctly describes advances from a change fund?

• A. They may be used to make advances to officials.
• B. They should not be used to make advances to officials or employees.
• C. They require supervisor approval.
• D. They may be used for personal purchases.

Answer: (B)

Change funds are kept to handle everyday cash transactions and provide small bills for making change. They are not a source of cash advances. Using a change fund to advance money to officials or employees bypasses the safeguards that come with petty cash handling and creates opportunities for mismanagement or loss. Therefore the correct statement is that advances from a change fund should not be used to give money to officials or employees. Why the other ideas don’t fit: using a change fund to make advances would defeat the purpose of having a controlled, limited cash pool; using it for personal purchases is inappropriate because those funds are public funds and must be used only for legitimate, work-related transactions; and requiring supervisor approval isn’t the issue being tested—the core point is the proper use of a change fund, which does not include issuing advances.

Change funds are kept to handle everyday cash transactions and provide small bills for making change. They are not a source of cash advances. Using a change fund to advance money to officials or employees bypasses the safeguards that come with petty cash handling and creates opportunities for mismanagement or loss. Therefore the correct statement is that advances from a change fund should not be used to give money to officials or employees.

Why the other ideas don’t fit: using a change fund to make advances would defeat the purpose of having a controlled, limited cash pool; using it for personal purchases is inappropriate because those funds are public funds and must be used only for legitimate, work-related transactions; and requiring supervisor approval isn’t the issue being tested—the core point is the proper use of a change fund, which does not include issuing advances.