The Cash Over and Short account:
A)Is used when the cash account reports a credit balance.
B)Is used to record the income effects of errors in making change and/or processing petty cash transactions.
C)Is not necessary in a computerized accounting system.
D)Can never have a debit balance.
E)Can never have a credit balance.

Question

Quizplus · Accepted Answer

The Cash Over and Short account is used to record the income effects of errors in making change and/or processing petty cash transactions. For example, if an employee accidentally gives a customer too much change, the excess amount would be recorded in this account as a debit. If the employee gives too little change, the shortfall would be recorded in this account as a credit. This account is important for accurately tracking cash transactions and detecting errors. It may still be used in a computerized accounting system. The account can have either a debit or a credit balance, depending on the circumstances.

The Cash Over and Short Account