Petty Cash and Imprest System

PETTY CASH AND IMPREST SYSTEM

Petty cash is the small cash reserves that businesses keep on the premises for miscellaneous cash needs.

Petty cash imprest system is an effective way to manage small day to day expenses.

This is how it looks

Advantages

- the petty cash of a company is kept at a constant rate.

- Commission of fraud is reduced as the Chief Cashier verifies petty cash book along-with vouchers and the Petty Cashier is more responsible.

- Practicality – small amounts do not require cheque payments

- the chief cashier replenishes the cash such that the petty cash box always has the same amount of float at the start of each period.

Since petty cash register does not form part of the double entry system, payments made through petty cash are subsequently posted into the cash ledger and the general ledger.

example

Mr. Mohan maintains a Columnar Petty Cash Book on the Imprest system. The imprest amount is Rs 700.

From the following information show how his petty cash book would appear for the week ended on 18th December.

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