Book-Keeping and Accountancy · Ch 5 — Subsidiary Books
Petty Cash Book and the Imprest System
Petty Cash Book and the Imprest System
A business's main Cashier deals with large receipts and payments — sales proceeds, supplier payments, salaries. Leaving that same Cashier to also record dozens of small, daily expenses (postage, stationery, auto-fare, tea for a visitor) would waste their time and clutter the main Cash Book with trivial entries. Instead, most businesses appoint a separate, junior Petty Cashier to handle these, using a dedicated Petty Cash Book — almost always run under the Imprest System.
Petty Cash Book
The Petty Cash Book is a subsidiary book, maintained by a Petty Cashier, recording numerous small, routine cash expenses of the business, usually analysed into separate expense-head columns.
Imprest System
Under the Imprest System, the Petty Cashier is given a fixed sum of money (the "imprest amount") at the start of a period. At the end of the period, the Head Cashier reimburses exactly the amount actually spent, so that the Petty Cashier again starts the next period with the same fixed imprest amount.
Advantages of the Imprest System: the Head Cashier's exposure to petty cash is limited to the fixed imprest amount at any time; the total spent in a period is known and reimbursed in one round figure; and because each expense head has its own analysis column, the total spent under each head (Postage, Stationery, Conveyance, etc.) is instantly available without adding up scattered entries.
Format of an Analytical Petty Cash Book
| Receipts (₹) | Date | Particulars | Voucher No. | Total Payments (₹) | Postage (₹) | Stationery (₹) | Conveyance (₹) | Sundry Expenses (₹) |
|---|
Illustration 9 — Preparing a Petty Cash Book under the Imprest System
The Head Cashier gives the Petty Cashier an imprest of ₹1,500 on May 1. The following petty expenses are incurred during May:
- May 2 — Postage ₹80
- May 6 — Conveyance ₹120
- May 10 — Stationery ₹150
- May 15 — Postage ₹70
- May 19 — Sundry Expenses ₹200
- May 23 — Conveyance ₹90
- May 28 — Stationery ₹110
Petty Cash Book
| Receipts (₹) | Date | Particulars | Voucher No. | Total Payments (₹) | Postage (₹) | Stationery (₹) | Conveyance (₹) | Sundry Expenses (₹) |
|---|---|---|---|---|---|---|---|---|
| 1,500 | May 1 | To Cash (Imprest) | — | |||||
| May 2 | Postage | 1 | 80 | 80 | ||||
| May 6 | Conveyance | 2 | 120 | 120 | ||||
| May 10 | Stationery | 3 | 150 | 150 | ||||
| May 15 | Postage | 4 | 70 | 70 | ||||
| May 19 | Sundry Expenses | 5 | 200 | 200 | ||||
| May 23 | Conveyance | 6 | 90 | 90 | ||||
| May 28 | Stationery | 7 | 110 | 110 |
A subsidiary book, maintained by a Petty Cashier, recording numerous small, routine cash expenses, usually analysed into separat …
A system under which the Petty Cashier is given a fixed sum at the start of a period and reimbursed exactly the amount spent at the end, restoring the same fixe …