Which of the following statements incorrectly describes an imprest system?
A)An imprest system is an internal control procedure relating to cash payments.
B)An imprest system helps eliminate the risk that the bank might overpay or underpay an employee.
C)The use of an imprest system eliminates the need for bank reconciliations.
D)If the transfers from the payroll account to the employees' checking accounts occur without error,the imprest payroll bank account will equal zero after all employees have been paid.

Question

Quizplus · Accepted Answer

An imprest system is a process that controls the amount paid to others by limiting the total amount of money available for making payments to others.Using an imprest payroll system,the company instructs the bank to transfer the total net pay of all employees for the pay period out of the company's general bank account and into a special payroll account established for that purpose.Then the bank transfers the individual amounts from the payroll account to the employees' checking accounts.If the transfers occur without error,the special payroll account equals zero after all employees have been paid.If the account is overdrawn or a balance remains,the company knows that an error has occurred.

Which of the Following Statements Incorrectly Describes an Imprest System