Question

What is an imprest system and what is a cash float?

A. An imprest system is a budgeting method, and a cash float is a type of investment.
B. An imprest system is a cash control method, and a cash float is petty cash set aside for daily expenses.
C. An imprest system is a payroll procedure, and a cash float is a type of financial report.
D. An imprest system is a tax calculation method, and a cash float is a banking term.

Answer 1

An imprest system is a cash control method, and a cash float is petty cash set aside for daily expenses.

Step-by-step explanation:

An imprest system is a cash control method where a fixed amount of money, known as the imprest amount, is set aside for specific purposes such as petty cash or travel expenses. The imprest amount is periodically reimbursed or replenished to maintain the initial balance. It helps ensure proper accountability and control over cash disbursements.

A cash float, on the other hand, refers to the amount of cash kept on hand by a business to provide change to customers during daily transactions. It is the cash held in the cash register or cash drawer to facilitate smooth transactions.

For example, in an imprest system, a company may allocate $1,000 for petty cash to cover small expenses. When the petty cash fund is running low, it is replenished back to $1,000. On the other hand, a cash float in a retail store may be $200, which is used to provide change to customers throughout the day.