Imprest System of Petty Cash

This is the perfect system for paying cash petty expenditures. In this system, accountant sets the month or week and he pays fixed amount to his assistant clerk for paying day to day small expenditures. Now, assistant clerk pays all small expenditures and records in petty cash book. Now, after closing the fixed period, accountant  replenishes the money which has been actually paid by assistant clerk for day to day small expenses. After this, assistant clerk will become imprest cash for next month small expenditures. So, this system is called imprest system of petty cash.
 For example, accountant pays $ 100 to his assistant clerk for small expenditures for a month. But assistant clerk paid only 80 $ for small expenses. After investigation, accountant will give only $ 85 to assistant clerk. Now, assistant clerk will have $ 100. Suppose, next month, he pays $ 95, then he will replenish $ 95 not $ 100.

Importance of Imprest System of Petty Cash

• This system is helpful to reduce accounting fraud because cashier or assistant clerk will replenish only what he paid actually for small expenses.
• Accountant or head cashier can analysis the petty expenses after comparing old petty expenditures for knowing trend of these petty expenses.