In an organization, there are many petty expenses to be paid in small amount. Taxi fare, cartage, postage and stamps, stationery etc. are some petty expenses for which it is not practicable to issue cheques. On the other hand, it will become very bulky if all these payments are entered in the cash book. Therefore, a petty cashier is given a certain sum of money to make such small payments and s/he enters them in a petty cash book.
Advantages of Petty Cash Book:
- Main cashier can utilize his/her time to important work since the petty expenses are recorded by petty cashier.
- It reduces the use of cheques and also avoids the inconvenience of issuing cheques for small payments.
- There are lesser chances of frauds and errors of all petty expenses due to the regular checking of petty cash book by head cashier.
Imprest System of Petty Cash Book
The work 'imprest' means 'advance amount' given to certain person to make petty payments. It is a system of petty cash book where a person (petty cashier) is given a fixed amount in the beginning of the month or week. He is supposed to make all small payments of petty expenses. At the end of the period say month or week, the vouchers are checked by head cashier and petty cashier is paid as much as he has spent during the period so that he will have the same amount as he had at the beginning of the first period.