Explain the term- cash short and over, Accounting Basics

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Explain the term- CASH SHORT AND OVER

This account is used to record both a shortage and overage of cash in cash drawer. When change is made during a business day, mistakes can be made and sales won't equal the amount of cash in the drawer. This is concluded by counting the drawer money, removing change fund, and comparing the amount left with the total of the Sales.

This account doesn't have a normal balance as it only summarizes the cash usage. At the end of month, if balance is a debit, it's considered an expense; if its balance is a credit, it's considered miscellaneous income.

Cash Short and Over is closed to Income Summary account at the end of accounting period. Miscellaneous Income if overage; Miscellaneous Expense if shortage.

 


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