IMPREST FUND vs.

FLUCTUATING FUND
Imprest fund system:
a. To establish the fund.
Petty cash fund xxx
Cash in bank xxx
b. Disbursement out of the fund.*
-No entry-
c. Replenishment.**
Expenses xxx
Cash in bank xxx
d. Adjustment to petty cash fund.***
Expenses xxx
Petty cash fund xxx
e. To increase the balance of the fund.
Petty cash fund xxx
Cash in bank xxx
f. To decrease the balance of the fund.
Cash in bank xxx
Petty cash fund xxx
Fluctuating fund system:
a. To establish the fund.
Petty cash fund xxx
Cash in bank xxx
b. Disbursement out of the fund.*
Expenses xxx
Petty cash fund xxx
c. Replenishment.**
Petty cash fund xxx
Cash in bank xxx
d. Adjustment to petty cash fund.***
-No entry-
e. To increase the balance of the fund.****
Petty cash fund xxx
Cash in bank xxx
f. To decrease the balance of the fund.
Cash in bank xxx
Petty cash fund xxx
Notes:
*
- Under the imprest fund system, only a formally signed petty cash voucher for payments of
expenses is needed by the petty cash custodian and only memorandum entries are simply prepared
in the petty cash journal. Disbursements are normally recorded upon replenishment of the fund. In
effect, the balance after replenishment is equal to the balance during the establishment of the fund.
- Under the fluctuating fund system, disbursements are immediately recorded in contrast with the
imprest fund system.
**
- Under the imprest fund system, replenishment of the fund is usually equal to the petty cash
disbursements. Replenishment should only be by means of drawing checks not from undeposited
collections.
- Under the fluctuating fund system, replenishment of the fund may or may not be the same amount
as the petty cash disbursement.
***
- Under the imprest fund system, it is necessary to adjust the unreplenished expenses in order to
state the correct balance of the fund.
- Under the fluctuating fund system, no adjustment is needed because of outright recording of the
expenses.
****
- Under the fluctuating fund system, the fund balance may still be increased despite an increased
effect in the fund balance during the replenishment.