Legal Definitions - changing fund

A changing fund refers to a specific, predetermined amount of cash, typically in smaller denominations, that a business or individual sets aside at the start of a sales period (like a business day or an event). Its primary purpose is to ensure that the seller can provide correct change to customers for their purchases, rather than being counted as part of the sales revenue itself. This fund is usually kept separate from the money collected from sales and is often reconciled or replenished at the end of the period.

• Example 1: Retail Boutique

  A small clothing boutique opens its doors each morning with a cash register containing $200. This amount is made up of various bills and coins, specifically designated to provide change to customers throughout the day. If a customer buys a $45 shirt and pays with a $100 bill, the cashier uses money from this initial $200 to give back $55 in change. At the end of the day, the $200 is accounted for separately from the day's sales, ensuring the boutique always has sufficient change for the next day.

  This illustrates a changing fund because the $200 is a fixed amount set aside solely for making change, not for covering expenses or being counted as revenue.

• Example 2: Community Bake Sale

  At a local school's annual bake sale, the parent-teacher association provides each sales table with a small cash box containing $50. This $50, comprising mostly $1, $5, and $10 bills along with coins, is intended to allow volunteers to give change to attendees buying baked goods. For instance, if a person buys cookies for $7 and pays with a $20 bill, the volunteer uses money from the $50 to return $13. The $50 is returned at the end of the sale, separate from the total funds raised from selling the baked goods.

  This demonstrates a changing fund as the $50 is a dedicated float for facilitating transactions by providing change, distinct from the actual proceeds of the sale.

• Example 3: Food Truck Operation

  A food truck preparing for a busy lunch rush at a festival ensures its cash drawer starts with $125. This specific amount, consisting of various small bills and coins, is the "changing fund." When a customer orders a $12 meal and pays with a $50 bill, the food truck operator uses money from this $125 to give the customer $38 in change. The $125 is kept separate from the total sales revenue generated from selling food throughout the day.

  This is an example of a changing fund because the $125 is a pre-allocated sum specifically for making change, enabling smooth customer transactions without depleting the day's earnings.