Question

Imprest system of Petty Cash book is system in which head cashier first estimates the total petty expenses of a particular period say month or fortnight and estimated amount is given to petty cashier in advance to meet petty expenses of particular period.

• A. True
• B. False

Answer 1

The correct option is A True

Under imprest system, a round sum of money estimated are necessary for the possible needs of the business to meet petty expenses for the week or fortnight is handed over to the Petty Cashier. At the end of the fixed period or earlier, when petty cashier needs further cash, he submits the petty cash book, along with vouchers.

The Chief Cashier examines the cash book with the vouchers. Then, Chief Cashier gives money/cheques for the exact amount, which he actually spent during the period. Thus, he starts for the next period with the same sum as held previously. That is, the petty cashier will have again the fixed sum in the beginning of the next period. This system is known as Imprest System of Petty Cash Book.