The Imprest System is a system for controlling petty cash. The person petty cashier is given an amount in advance of expenditure. This amount also known as the “float.”
Under the Imprest system, 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. Each disbursement paid out from the float must be supported by a petty cash voucher and issued by an authorized person.
Advantages of the Imprest System of keeping petty cash
The Petty Cash Book is used to record small payments. Such payments include postage, reimbursement to employees for small purchases of office supplies and numerous similar items.
The advantages of using a petty cash book are as follows:
1. Practicality – small amounts do not require cheque payments
2. Flexibility – size of float can be adjusted to business needs
3. Accountability – a junior staff can be responsible for the petty cash
4. Control over:
a. Mistakes – the chief cashier checks the Cash Book regularly
b. Petty expenses – expenses keep within certain dollar limits imposed by the system
c. Theft/ fraud – misappropriation cannot exceed the Imprest cash amount.
A petty cash system begins when a cheque is cashed and the cash is placed in a petty cash box.