An imprest is a cash account a business relies on to pay for small, routine expenses. Funds contained in imprests are regularly replenished, in order to maintain a fixed balance. The term “imprest” can also refer to a monetary advance given to a person for a specific purpose.
What is the imprest account system used for?
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.).
What does an imprest account do for a business?
The imprest petty cash system is a method of accounting for petty cash expenses. An imprest is a cash account a business relies on to pay for small, routine expenses. Funds contained in imprests are regularly replenished, in order to maintain a fixed balance.
What does it mean to have an Imprest Balance?
The imprest balance is the amount of cash stated in the general ledger for the petty cash account. This amount does not change. Instead, when cash is issued to replenish a petty cash box, the debit is to the expenses for which cash was paid, while the credit is to the general cash account.
When to refund money to the Imprest Account?
A fixed account balance is established in the imprest account and refunded as needed when money is withdrawn for items like payroll, travel, or petty cash. Because of its small and fixed nature that is easily monitored, imprest discourages unauthorized or lavish expenses.
How are expenses recorded in the imprest system?
The imprest system was developed to track and document cash expenses and how they are used, following a general process: A petty cash fund is established, with a set amount of cash. This is recorded in the company’s ledger. Any expenses paid through the petty cash fund must be documented with receipts.
