Chapter 18

Petty cash book and the imprest system

Division of the cash book
The task of handling and recording small cash payments can be given by the cashier (the
person Responsible for recording entries in the cash book) to a junior member of staff. This
person is known as the 'petty cashier'. The cashier, who is a more senior and, consequently,
higher paid Member of staff would be saved from routine work.
The imprest system
The imprest system is one where the cashier gives the petty cashier enough cash to meet the
Petty cash needs for the following period.
The imprest system and this topped-up amount is known as the petty cash float
 When one is going to give amount to any person for a specific period of time this is
known as imprest system
 Under imprest system a pre fixed amount is required for petty expenses for a period is
provided to the petty casher in the beginning of the period in that period the petty
cashier incurs the petty expenses and will have some amount of petty cash balance
with him at the end of the period
 At the beginning of the new period he will be reimbursed the amount to make the
balance at the same per fixed amount
Petty cash book
 This is known as the second type of cash book
 Small businesses use this for recording business system
 Cash book has two columns bank as well as cash
 Cash book also has three columns bank cash and discount column
o The major difference between cash book and petty cash book is the cash
book deals with all three portions
o Whereas petty cash book deals with petty cash only
 In any business there are huge number of small transactions
 For small transactions we will not go for cashier but we will work
with petty cashier
 As due to small transactions our cash book will be disturbed due to
this we use petty cash book
 In cash book we deal with large sum of money whereas in petty cash
book we use to deal with small business transactions
Format of petty cash book
Total received column debit side
Date
Detail
In cash book the detail column are of two portions
Total paid credit side
Motor expenses
Postage and stationary
Ledger accounts
 When one is going to pay amount to supplier as paying amount to supplier is not any
kind of expense so this will be transferred to ledger accounts
Ledger account is the column that is used to pay amount to suppliers
Balance brought down is used to for the starting of the month
Balance carried down is use for the ending of the amount