Imprest System & Preparation of Petty Cash Book

What is a Petty Cash Book?

The petty cash book is a book of original entryBook of original entry is an accounting book or journal in which invoices, vouchers, cash transactions and others are first recorded before they are transferred to ledger accounts. This is the... More or prime entry, which is used for recording small disbursements or expenses.

The reason behind the system is to reduce the numerous cash payments for small expenses. The source documents used in the petty cash book are invoices, receipts, and vouchers.

Imprest System:

The imprest system is a method of recording petty cash transactions . In this system, a fixed amount of money, called the cash float (or imprest), is given to the petty cashier at the beginning of a period.

As the petty cashier makes payments for small expenses (e.g. postage, cleaning, stationery, etc.), the amount of cash left reduces.

At regular intervals, usually at the end of the month, the petty cashier is reimbursed with the exact amount spent. This reimbursement brings the petty cash balance back to the original float.

For example:

• Float given = ₦250
• Spent = ₦150
• Balance = ₦100
• Reimbursement = ₦100 (so that float returns to ₦250)

Thus, the