Question

The Cash Over and Short account:

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

Answer 1

Answer:

Cash over and short also known as cash over and short account, is an account that is useful to records errors in cash receipts or payments resulting in overages or shortages. In simple words, cash over and the short account is an account that shows the effect that errors in recording cash collections and payments have on income.

Cash over and short account may have the credit or debit balances & also used in the computerised accounting system.

Accordingly, The cash over and the short account is used to record the income effects of errors in making change and/or processing petty cash transaction

Accordingly, Option (D) is the correct answer.