Read this article to learn about the meaning and preparation of analytical and imprest system of petty cash book. Petty cash book is a readytouse excel template to systematically record and manage your petty or small daily routine payments. Ref guide petty cash 0408 perelman school of medicine. There are two primary types of entries in the petty cash b. The main advantages of imprest system of petty cash are as follows. The additional analysis columns are used to analyze expenditures as they arise. Petty cash book is maintained by the petty cashier. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Balancing period the petty cashier is given fresh cheque of the amount equal to his payments during the same period.
Here are some advantages and disadvantages to using petty cash as an expense management solution. The preferred method of reimbursements is by check, requested via a properly authorized and documented check request. The imprest system is an accounting system designed to track and document how cash is being spent. The petty cash book is maintained by separate cashier known as petty cashier. The main advantages of petty cash book publish your article. In large business concerns, the petty cash book is maintained in columnar or analytical form, with a separate column for each usual item of expense and a column for. Petty cash is a small reserve of cash kept onsite at a business location for incidental cash needs. The advantages of petty cash system enumerated are as follows. It is a ledger kept with the petty cash fund to record amounts that are added to or subtracted from its balance. Petty cash imprest funds and reimbursements petty cash. What are the advantages of using the imprest system. Under the imprest system maintaining petty cash book, petty cashier is provided with a fixed amount of money known as imprest or float which is sufficient to meet the needs of balancing period. The petty cashier has liability not to expend the petty cash more than.
Nov 04, 2015 ordinary system imprest system in this system petty cashier is given appropriate amount of cash after spending the whole of that amount the submits the account to the head cashier this is the system of paying advance in the beginning and reimbursing the amount system of petty cash book 7. What is the petty cash imprest system, and why would a. Petty cash book 2019, imprest system of petty cash advantages. In other words, the amount lying with the petty cashier will never exceed imprest cash. An imprest system of petty cash means that the general ledger account petty cash will remain dormant at a constant amount. Nov 27, 2019 in the petty cash book not part of the double entry bookkeeping system, the cash received to replenish the fund of 65 is recorded and the imprest fund is now back to its original cash amount of 100. The analytical petty cash book and the imprest system springerlink. Cash imprest petty cash policy statement based on the cost centers request, the university assigns to one fulltime employee per cost center a petty cash fund commensurate to average departmental minor operating needs and obligations. By watching this video you will understand how to record all the entries in the petty cash voucherreceipt book. Payments in cash of small amounts like traveling expenses, postage, carriage etc are petty cash expenses, petty cash. Petty cash book format example definition explanation. Tweet petty cash and the imprest cash float system petty cash many business normally keeps a small amount of money to meet some small cash disbursements like payment of postage, medical claims, staff traveling claims. Advantages, disadvantages, and the pex alternative.
You may learn more about accounting basics from the following articles ledger account practical examples. Petty cash and the imprest cash float system college. An imprest system is used to run and manage a petty cash fund. Besides maintaining a main or general cash book, many companies also maintain a small cash book known as petty cash book to record small day to day expenditures of the business. Petty cash imprest system allows only the replenishment of the spend made. Meaning of petty cash book, its importance and advantages. Petty cash book 2019, imprest system of petty cash. You need to develop a set of policies or procedures dictating the handling of cash in your business to avoid problems such as theft and misappropriation. The petty cash imprest system allows only the replenishment of the spend made.
So, if you start the month with 100 in your petty cash float and spend 90 of that cash in the month, an. First, management has to estimate how many small purchases it will make and much money it will need for these purchases. Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque, because of the inconvenience and costs of writing, signing, and then cashing the cheque. The attached article explains best practice for this. Sep 30, 2019 is the petty cash box a help or a hindrance. The firm may adopt imprest system of maintaining petty cash. Jul, 2019 the imprest system is an accounting system for paying out and subsequently replenishing petty cash. A petty cash book is used for recording and tracking small purchases such as parking meter fees that arent suitable for check or credit card payments. What is the difference between an imprest and non imprest. Generally a columnar petty cash book is used in which different columns are provided for different petty expenses. If at any time the total of the remaining cash held plus the petty cash vouchers is not equal to the.
Each month, accountants or other employees will need to balance petty cash and replenish the funds. The most common example of an imprest system is the petty cash system. Payments in cash of small amounts like traveling expenses, postage, carriage etc. Mar, 2018 the petty cash book is a formal summarization of petty cash expenditures, sorted by date. Nov 23, 2015 understand how the imprest system works in the petty cash book. Here we discuss the format of petty cash book, types of petty cash systems. What is the petty cash imprest system, and why would a business use it. Many expenses of small nature are recorded in petty cash book.
Thus, the book is part of a manual recordkeeping system. Commission of fraud is reduced as the chief cashier verifies petty cash book alongwith vouchers and the petty cashier is more responsible. As head cashier checks the accounts of previous month and gives advance for the coming month, thus, errors if any are reduced. The most common way of accounting for petty cash expenditures is to use the imprest system. What is the difference between an imprest and nonimprest. It relieves the cash book and the chief cashier of the burden of recording tiny and frequent payments. An imprest is a cash account that a business uses to pay for small, routine expenses. Understand how the imprest system works in the petty cash book. The cash book can be maintained properly as petty transactions are maintained separately. The cash book and 8 the petty cash book ethaksalawa.
Download petty cash book excel template exceldatapro. 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. Is there a better way to solve the small expenditure dilemma. Petty cash funds are for expenditures connected to approved university activities. Besides maintaining a main or general cash book, many companies also maintain a small cash book known as petty cash book to record small day to day expenditures of the business petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel, newspapers, cleaning, pins, and causal labor etc. Petty cash imprest funds are provided to enable departments to make cash conveniently available for minor business expenditures. Most cash should be deposited right away in the bank, but a small amount can be kept on hand in a petty cash account earmarked for minor. A petty cash fund is a segregation of an advance of money from a fund to be used for incidental purchases and for explicit purposes explained in paragraph 3. Large businesses maintain petty cash book to reduce the burden of main cash book. For this purpose, a petty cashier is appointed by the firm, to pay for small payments usually below rs.
A sum of money is set aside in an imprest account or petty cash fund, a fixed account used to make minor disbursements. Petty cash is an easy to understand and familiar method of paying for company expenses. Manage your business expenses anytime, anywhere with debitoor invoicing software. These petty cash expenses are recorded in the petty cash book. Fixed amount is paid to the petty cashier along with the imprest system. Using imprest, the petty cash of a company is kept at a constant rate. The advantages of using the imprest system are versatility, accountability, practicality, limitation of theft, ease of use and limitation of expenditure. Here we discuss the format of petty cash book, types of petty cash systems including the ordinary and imprest system along with its advantages and disadvantages. The system is a form of managing petty cash in a business. Marks the advantages of using the imprest system are. The imprest system is designed to provide a rudimentary manual method for tracking petty cash balances and how cash is being used. Petty cash book is a ledger book, which is used to record petty cash expenses formally in chronological order, with the date. Meaning of petty cash book a petty cash book is one in which all petty or small payments made through petty cash fund are recorded systematically.
The chief cashier is relieved from the cumbersome work of petty cash disbursement. Petty cash is the small cash reserves that businesses keep on the. What is imprest system in maintain petty cash book. Before the rise in the use of credit cards and charge cards, nearly all companies used petty cash accounts to allow employees responsible for purchasing small supplies to do so with minimal hassle. Learn more about petty cash expense management, and decide which system is right for your business. In the petty cash book not part of the double entry bookkeeping system, the cash received to replenish the fund of 65 is recorded and the imprest fund is now back to its original cash amount of 100. The total of petty cash on hand plus the amount of signed receipts or petty cash vouchers at any one time must equal the total amount authorized for the imprest account. A s the petty cashier has to produce to the chief cashier the petty cash book for inspection, it acts as a healthy check on the petty cashier. The amount will be below or equal to the limit set by the guidelines to this policy. Establish and administer petty cash, imprest and change funds. Petty cash book is a type of cash book that is used to record minor regular expenditures such as office teas, bus fares, fuel. A fixed balance is maintained in the account, and it is replenished routinely to maintain that. In this way the petty cashier will start every time with an amount equal to imprest cash. How the imprest system of petty cash book works your business.