The major advantage of an imprest system is that it ?

A. ensures proper accountability for every expenditure
B. trains the young accountants in the preparation for greater responsibility
C. relieves the chief cashier of the numerous petty cash payments
D. serves as an analysis column for every expense

Correct Answer:

Option A – ensures proper accountability for every expenditure

Explanation

An imprest system is a form of a financial accounting system. The most common imprest system is the petty cash system. The base characteristic of an imprest system is that a fixed amount is reserved, which after a certain period of time or when circumstances require, because money was spent, it will be replenished. This replenishment will come from another account source, e.g., petty cash will be replenished by cashing a cheque drawn on a bank account.

The advantages of using the Imprest system are versatility, accountability, practicality, limitation of theft, ease of use and limitation of expenditure. A system is a form of managing petty cash in a business.