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what do you understand by imprest amount in petty...

Question:
What do you understand by Imprest amount in petty cash book?

Answer:

Imprest System of Petty Cash

Under this system, the petty cashier is given a definite sum,say ₹ 5,000, at the beginning of a certain period. This amount is called ‘imprest amount’.

A good Imprest System should have the following essentials:

1) The petty cashier should obtain receipts for all the payments made by him.All these receipts should be arranged date aise and numbered so that these may be checked up easily by the main cashier when he takes reimbursement of the amount spent by him.
2) The petty cashier should himself prepare proper vouchers for those expenses for which proper receipts cannot be obtained. He should get these vouchers sanctioned from a proper authority.
3) There should be an upper limit of the amount of a single payment by the petty cashier. Payment above this limit should be made only by the main cashier.
4) Petty cashiers should get the reimbursement of the amount spent by him only from the main cashier.
5) Petty Cashiers should not be entitled to receive any cash coming from outside the business.
6) Great care should be taken while fixing the amount of interest. It should be sufficient to cover the petty expenses for the month.

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Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.

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Question:
What do you understand by Imprest amount in petty cash book?

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Question:
What do you understand by Imprest amount in petty cash book?