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A petty cash imprest system is a method of managing small cash expenses in a business or organization. Under this system, a fixed amount of cash is set aside in a petty cash fund, which is used to pay for small and infrequent expenses like office supplies or postage.
Oversight of petty cash [3] is important because of the potential for abuse. Examples of petty cash controls include a limit on disbursements and monthly audits by someone other than the custodian. [4] Use of petty cash is sufficiently widespread that vouchers for use in reimbursement are available at any office supply store.
Petty cash is a small amount of cash that is used for payment of insignificant expenses and the amount of it may vary depending on the organisation. [7] For some entities $50 is adequate amount of cash, whereas for others the minimum sum should be $200. Petty cash funds must be safeguarded and recorded in order to avoid thefts.
An implicit assumption in direct capitalization is that the cash flow is a perpetuity and the cap rate is a constant. If either cash flows or risk levels are expected to change, then direct capitalization fails and a discounted cash flow method must be used. In UK practice, Net Income is capitalised by use of market-derived yields.
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