What is Cash Over and Short?

In the second quarter of 2020, for instance, e-commerce sales totaled $205.3 billion, up 55% from the $132.3 billion recorded a year earlier. In the fourth quarter of https://www.bookstime.com/ 2020, e-commerce accounted for 16.7% of all retail sales, still the record-high share. Cash over and short refers to an account that records the differences in cash.

Alternatively, if there had been too much cash in the petty cash box (a rare condition indeed!), the entry would be reversed, with a debit to cash and a credit to the cash over and short account. The cash over and short is recorded on debit when there is a shortage. In contrast, the cash over cash short and over and short is recorded on credit when there is overage. The shortage journal entry is one of many bookkeeping entries used in accounting, discover another at the links below. Therefore, the balance of cash short and over is on debit or credit depends on whether it is shortage or overage.

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This practice may be more common in some industries than others, for example, banking. When handling cash, companies may experience discrepancies in the amount of physical cash and the value recorded in the books. This term pertains primarily to cash-intensive businesses in the retail and banking sectors, as well as those that need to handle petty cash.

If a cashier or bank teller errs by giving too much or too little change, for example, then the business will have a “cash short” or “cash over” position at the end of the day. The cash short/over account is an expense account in the income statement of the business. The primary use of the cash over and short account is in cash-intensive retail or banking environments, as well as for the handling of petty cash.

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This cash shortfall is recorded as a debit to the cash over and short account (which is an expense) and a credit to the petty cash or cash account (which is an asset reduction). Cash Over and Short is an income statement account used to track differences in cash collections from what is expected and what is actual. It is used in businesses that use cash in day-to-day operations, for example, retail stores and restaurants. Cash Over and Short reconciles what is in the cash drawer vs. what the cash register record says should be in the cash drawer.

The cash over and short account is used to record the difference between the expected cash balance and the actual cash balance in the imprest account. A controller conducts a monthly review of a petty cash box that should contain a standard cash balance of $200. He finds that the box contains $45 of cash and $135 of receipts, which totals only $180.