Most companies use an imprest account to pay the payroll. Which of the following is not an advantage of such an account?
A) It allows the delegation of payroll check- signing duties.
B) It limits the company's exposure to payroll fraud.
C) It eliminates the requirement of keeping a minimum balance in a checking account.
D) It facilitates cash management.

Question

Quizplus · Accepted Answer

An imprest account, such as a petty cash system, is specifically designed to manage and control small, routine expenses, including payroll in some cases. It requires replenishing after disbursements, which means it doesn't eliminate the need for maintaining a minimum balance in a primary checking account. Instead, it helps in controlling expenses, delegating responsibilities, limiting fraud exposure, and improving cash management by segregating funds for specific purposes.

Most Companies Use an Imprest Account to Pay the Payroll