The most common imprest system is the petty cash system. The imprest system reduces the chances of misuse of cash because the float can be immediately reduced if it is found to be more than adequate for the agreed period. Apetty cash bookis generally maintained on a columnar basis a separate column being allotted for each type of expenditure. The bookkeeper records the amount allocated to the petty cash fund in the petty cash book, which. Each entry in the petty cash book should include the date, the amount. The difference between the imprest system t and variable balance system for petty cash control and also for why you favour the one method over the other. How the imprest system of petty cash book works your. Guidance in this section applies to petty cash, imprest accounts, working funds, advance travel, stamp funds, change funds, or any other revolving funds set. In a imprest system, a cashier is provided a small amount to meet the petty expenses of a given period and is authorized to make such payments and to record them in a separate cash book. This video shows the creation and replenishment of petty cash. The imprest system is designed to provide a rudimentary manual method for tracking petty cash balances and how cash is being used. In this way the petty cashier will start every time with an amount equal to imprest cash. The daily transactions that use the petty cash are entered into this system which ensures that there is.
Under the imprest petty cash system, the petty cashier amount is fixed for a given time period under which is usually under a month or a week. Petty cash book format example definition explanation. It relieves the cash book and the chief cashier of the burden of recording tiny and frequent payments. Generally a columnar petty cash book is used in which different columns are provided for different petty expenses. In an imprest system, the amount in hand plus the amount of all receipts should be equal to petty cash balance. The credit side consists of several analysis columns. Wasting resources on activities not in line with business objectives. With an imprest system, accountants or bookkeepers track petty cash in the petty cash book. Petty cash book system are also called as imprest system. A fixed amount of cash is allocated to a petty cash fund, which is stated in a separate account in the general ledger. The general description of imprest involves establishing a fund or account for the payment of specific or miscellaneous expenses.
Please help improve it or discuss these issues on the talk page. How the imprest system of petty cash book works azcentral. The most widely used system for petty cash is called an imprest system. What are the importance of petty cash imprest system answers. The imprest system is an accounting system for reimbursing out and succeeding refilling petty cash. When cash is paid from the checking account, the entry is a debit to the various expenses for which receipts are being supplied by the petty cash. The person who is maintaining petty cash book is called as a petty cashier. The imprest system is a form of financial accounting system.
An imprest system of petty cash is used for more control over cash in hand. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. A petty cash fund is a type of imprest account, which means that it contains a fixed amount of cash that is replaced as it is spent in order to. Define the purpose and use of a petty cash fund, and prepare. In other words, the amount lying with the petty cashier will never exceed imprest cash. Under this time period, the cashier has to run the petty cash account under the given budget. The imprest system of petty cash is used by most of the companies because of the following advantages. Check your understanding of a petty cash fund in this worksheet and quiz. The petty cash account is used to make small purchases. Petty cash is a small fund of cash kept onsite at a business place for auxilliary cash needs. Imprest, petty cash and other revolving funds office of the. The process to establish, use, and reimburse an imprest petty cash system is outlined below. Commission of fraud is reduced as the chief cashier verifies petty cash book alongwith vouchers and the petty cashier is more responsible.