A petty cash book is created to facilitate small payments in a business or organization. It caters for items such as postage and stamps, bus fare and stationery. It is meant to meet the day-to-day expenses and is entrusted in the hands of a petty cashier.
What is the advantage of using the imprest basis in accounting for petty cash?
The advantages of using the Imprest system are versatility, accountability, practicality, limitation of theft, ease of use and limitation of expenditure. The system is a form of managing petty cash in a business. Using Imprest, the petty cash of a company is kept at a constant rate.
What are the two main advantages of the petty cash system?
A petty cash fund can be used for office supplies, cards for customers, flowers, paying for a catered lunch for employees, or reimbursing employees for expenses. Petty cash’s main advantages are that it’s quick, convenient, and easy to understand and use.
What does imprest amount mean?
The imprest amount is the fixed amount of cash that is presumed to be located in a petty cash box. When the petty cash box is replenished, the cash comes from the regular cash account, rather than the petty cash account, so the imprest amount remains the same.
What are the risks associated with petty cash?
Petty cash is an example of accepting inherent risks of holding cash against its potential benefits….Internal auditors need to be aware of these risks, which include:
- Waste. Wasting resources on activities not in line with business objectives.
- Misappropriation of funds.
- Human error.
How should a petty cash system be maintained?
Ideally the money should be kept in a lockable cash box. The petty cashier should keep the key to the petty cash box in a safe place with a duplicate key being kept by the main cashier or accountant. The box together with the petty cash book should ideally be kept in a fireproof safe or cabinet.
Who is responsible for maintaining petty cash book?
The person responsible for spending petty cash and recording it in a petty cash book is known as petty cashier.
How do I protect my petty cash?
Safeguard the cash.
- Keep petty cash funds in a secure area such as a locked drawer or small safe.
- Ensure segregation of duties.
- Reconcile the log of petty cash expenses to the amount in the cash box at least quarterly, or monthly if the petty cash account is associated with sponsored funds.
What is petty cash procedure?
When cash is added to a petty cash fund, the basic concept is to replace the amount of any cash that had previously been disbursed from the fund. This involves summarizing all disbursements made and issuing cash back to the fund for that amount. The cashier deposits the check and converts the funds into cash.
