Imprest system and Non-imprest system

Question 1

What are the two different systems used for Petty Cash?

Answer 1

The Imprest system and the Non-imprest system.

Question 2

How does the Imprest system work?

Answer 2

The business decides on a fixed level of petty cash. Cash is withdrawn from the bank to replenish the amounts paid out of petty cash, as detailed on the petty cash vouchers. This demonstrates good internal controls as it can keep track of unauthorised spending or poor record keeping.

Question 3

How does the Non-imprest system work?

Answer 3

A round sum amount of cash is withdrawn from the bank to top up the petty cash. The sum taken out is regardless of the value of expenses paid since the last top up.

Question 4

What should be completed when petty cash is taken out of the petty cash box?

Answer 4

A petty cash voucher.

Question 5

What should a petty cash voucher state?

Answer 5

The date of the transaction, the voucher reference number, what the cash is going to be used for, how much cash has been taken out and an analysis (net, VAT, gross), who has taken the cash, who has authorised the withdrawal.

Question 6

After a voucher is completed, where should it be placed?

Answer 6

It should be placed in the petty cash box.

Question 7

In a petty cash book, where should the receipts and the petty cash vouchers go?

Answer 7

Receipts should go into the left hand side (Date, Details, Total £) whereas Vouchers should go into the right hand side (Date, Details, Voucher number, Total £, Analysed columns £, VAT £).

Question 8

True or False: The Petty Cash book is totalled and balanced in the same way as any other account.

Answer 8

True.