What do you understand by Imprest amount in petty cash book?
The Imprest amount refers to a definite sum of money given to the petty cashier at the beginning of a certain period under the Imprest system. For example, if ₹2,000 is given to the petty cashier, this amount is called the imprest amount.
The petty cashier makes all small payments such as conveyance, cartage, postage, and other repetitive expenses from this imprest amount. When a substantial portion of this amount is spent, the petty cashier receives reimbursement from the head cashier for the amount actually spent.
After reimbursement, the petty cashier again has the full imprest amount at the beginning of the next period. The reimbursement may be made on a weekly, fortnightly, or monthly basis depending on the frequency of small payments in the organisation.
Explanation
The textbook explains that the imprest system ensures the petty cashier always starts each period with a fixed amount. The key points are: (1) A fixed/definite sum is given at the start of a period, (2) Small payments are made from this amount, (3) Reimbursement is received for the amount spent, (4) The full imprest amount is restored at the beginning of the next period. This system helps maintain control over petty expenses and prevents the main cash book from becoming bulky.