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What is an imprest fund system in accounting?

What is an imprest fund system in accounting?

The imprest system is an accounting system designed to track and document how cash is being spent. The most common example of an imprest system is the petty cash system. Manage your business expenses anytime, anywhere with Debitoor invoicing software.

How the imprest petty cash method works?

An imprest system of petty cash means that the general ledger account Petty Cash will remain dormant at a constant amount. If the amount of petty cash is $100, then the Petty Cash account will always report a debit balance of $100. This $100 is the imprest balance.

What are the two methods in accounting for petty cash fund?

Forms used for Operating Petty Cash Fund The petty cash fund can be operated in the two ways: ordinary and imprest system of petty cash fund.

What is an imprest account example?

The most common examples of imprest accounts include those used for employee payroll, dividends, sales commissions, bonuses, travel expenses, and petty cash. As money is withdrawn from the account, it is replenished to the pre-established funding level.

How do you record reimbursement of petty cash fund?

In order to reimburse the petty cash, we need to record the transfer of cash at bank to petty cash. As the company has used a petty cash amount $ 2,600 so we need to reimburse back this amount to let the petty cash reach the float. The company makes journal entry by debiting petty cash $ 2,600 and credit cash at bank.

Which method used to prepare petty cash book?

Imprest System of Petty Cash This is the most scientific approach to maintain Petty Cash. Under the imprest system, total petty expenses for a specific period are estimated and the amount is advanced to the petty cashier. This amount is known as imprest cash. The petty cashier spends the imprest cash during the period.

What type of an account is the petty cash fund?

imprest account
A petty cash fund is a type of imprest account, which means that it contains a fixed amount of cash that is replaced as it is spent in order to maintain a set balance.

How is the imprest system used?

The Imprest system is an accounting system that’s used to track how your business is spending cash. In most cases, Imprest systems are used to account for petty cash (a small amount of money used for expenditure on smaller items, i.e. office supplies, catered lunch, cards for customers, etc.).

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