Bookkeeping › Cash Book & Petty Cash

What is the imprest system for petty cash?

Intermediate

Answer

Under the imprest system, petty cash starts with a fixed float (the imprest amount). Payments reduce the cash; periodically the float is restored (reimbursed) by exactly the amount spent, bringing it back to the imprest. At any time, cash on hand plus vouchers should equal the imprest, providing a built-in control.
Imprest 200. Spent (vouchers) 150. Cash left 50.
  50 + 150 = 200 (checks).
  Reimburse 150 -> float back to 200.
Real-world example The cashier reimburses exactly what was spent so the petty cash float always returns to its 200 imprest level.

Common follow-ups: How does the imprest system act as a control? | What should cash + vouchers equal?