Describe the Petty Cash Book and the Imprest system of Accounting.

Describe the Petty Cash Book and the Imprest system of Accounting.

A Petty Cash Book records all the petty cash vouchers maintained by a cashier. The petty cash vouchers summarize expenses paid by the cashier. These expenses are classified in the petty cash book as per the individual expense.

The Closing balance of the petty cash book represents the balance of cash in hand. The totals amount of the expenses is posted to the debit side of the expense accounts. In case a business firm operates another cashbook together with a petty cash book, then the totals of the expenses are posted on the credit side of the cash in hand cashbook.

The Imprest system
The imprest system refers to the system where a petty cashier is given enough cash by an accountant to meet the petty cash needs for a particular period. At the end of the period, the accountant finds out the amounts spent by the petty cashier, by accessing the Petty Cash Book.
The accountant now reimburses the value of the amount spent on petty cash in the period to the petty cashier with the aim of restoring back the amount that was available at the beginning of the period. This system is referred to as the Imprest System and the reimbursed amount is referred to as the Petty Cash Float.

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Kavungya answered the question on August 17, 2021 at 09:23

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