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What Is The System Of Petty Cash Accounting?

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Bilal Ahmad answered
Here are the details of systems of petty cash accounting:  1. Open System:  Under this system the petty cashier at first receives from the chief cashier a fixed sum of money for meeting petty expenses. As soon as the said amount is spent, the chief cashier again pays the required sum to the petty cashier.    2. Fixed advance system:  Under this system the petty cashier receives from the chief cashier a fixed sum of money for a fixed period of time i.e. US $ 2,000 per month. The chief cashier will pay US $ 2,000 to the petty cashier every month irrespective of this that whether the petty cashier has spent the total sum or not.    3. IMPREST System  This system is generally followed by most of business concerns. Under this system, the total petty expenses for a particular period are estimated and that amount is advanced by the chief cashier to the petty cashier. This amount is called IMPREST cash. On the expiry of the fixed period the petty cashier prepares a statement of his expenses and submits it o the chief cashier. This statement is known as statement of petty expenses. The chief cashier examines the statement and if he finds it correct, hands over the petty cashier an amount equal to the amount actually spent. This amount plus the amount lying unspent with the petty cashier will be equal to the IMPREST cash.

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