You have probably heard of the term “imprest” in relation to petty cash but do you actually know what it means?

Here’s a brief explanation for you.  Say the amount of the petty cash float is $100.  This amount will always appear on the Balance Sheet report under the title of “Petty Cash” and is the imprest amount.  Irrespective of how much the actual balance may be in the petty cash tin itself, the amount in the Balance Sheet will always remain as $100.

The transactions that take place from the petty cash system are allocated to the relevant expense accounts when the finance reports are prepared.  This is why it is important to accurately record the petty cash transaction and reconcile it on a regular basis.

Therefore, at any point the remaining balance plus the value of the receipts that have been reimbursed should add up to the total cash or “imprest” amount of $100.

So if Friar Tuck went out to buy the goods needed for a pie for dinner that night and spent $50 at the butcher and $20 at the ale house, the receipts will total $70 and there should be $30 remaining in the petty cash tin.  There is your $100.

If there are any variations then you should try to find out why they occurred.  In most cases it may be that there was no receipt provided.  If this happens it is important to make a note to explain what occurred.  Some not for profit organisations even require that a statutory declaration is completed by the person receiving the reimbursement.

Remember that when you reimburse someone, you should prepare a petty cash receipt or voucher that records the details of the transaction, including the date, the amount, what it was for and the person receiving the amount.  Simple petty cash receipt books can easily be obtained from a stationery store and they always retain the carbon copy.  The details should also be recorded on the transaction listing associated with the petty cash which is also used to track the running balance and reconciliation of the petty cash.