PRINCIPLES OF ACCOUNTS

IN THE OPERATION OF AN IMPREST OF PETTY CASH, THE

  • A. petty cashier pays all expenses
  • B. petty cashier pays money to the accountant
  • C. petty cashier regularly begins each period with the same amount of money ✓
  • D. main cashier accounts to the petty cashier for some experiences made by him

 

In an imprest system of petty cash, a fixed amount of money is provided to a designated petty cashier at the beginning of a specific period, such as a week or a month. The petty cashier is responsible for disbursing this cash to cover small expenses incurred by the organization. At the end of the period, the petty cashier is required to reconcile the petty cash fund by replenishing it to its original amount. This ensures that the petty cash fund remains constant and that all expenditures are properly recorded.

In other words, in the operation of an imprest of petty cash, the key concept is that the petty cashier regularly begins each period with the same fixed amount of money. This system is designed to facilitate the management of small, routine expenses without the need for constant reimbursement requests. Here’s a breakdown of how the imprest system works:

Imprest System: The imprest system is a method used by businesses to manage small, routine expenses efficiently. It involves establishing a fixed amount of money (the imprest fund) that is entrusted to a designated petty cashier. The petty cashier is responsible for using this fund to cover minor expenses such as office supplies, postage, or other incidental costs.

Key Features:

  1. Fixed Amount: At the beginning of each accounting period, the petty cashier is given a specific amount of money to start with. This starting amount remains constant from one period to the next.
  2. Reimbursement: As the petty cashier disburses funds to cover various expenses, they are expected to keep detailed records and receipts for accountability purposes.
  3. Replenishment: When the imprest fund runs low, the petty cashier can request reimbursement from the main cashier or accountant to restore the fund to its original amount.

Benefits:

  • Efficiency: The imprest system streamlines the process of handling small expenses by providing a readily available fund.
  • Accountability: By requiring documentation for all expenditures, the system promotes transparency and accountability in financial transactions.
  • Control: Setting a fixed amount helps control spending and prevents misuse of funds.

In summary, in the operation of an imprest of petty cash, it is essential that the petty cashier consistently starts each period with the same predetermined amount of money to effectively manage day-to-day expenses within an organization.

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