Definition
Over and Short (Cash Over Short): An accounting term indicating a discrepancy between a company’s reported cash figures (derived from sales transactions or receipts) and the amounts verified during an audit. This account records instances where cash is either short (less than reported) or over (more than reported). Commonly found in cash-intensive sectors like retail and banking, it reflects errors in cash handling.
| Over and Short | Cash Drawer Adjustment |
|---|---|
| Refers to discrepancies encountered after cash transactions. | An entry made to adjust the totals in a cash drawer when there is an overage or shortage. |
| Recorded in the cash-over-short account in the general ledger. | Recorded directly in the cash drawer’s daily log. |
| Commonly seen in retail and banking environments. | May apply in various settings where cash is handled (e.g., petty cash funds). |
Examples
- A cashier mistakenly gives a customer $20 too much change. At the end of the day, they find they are “cash over” by $20. This amounts to a cash over short balance of +$20.
- Conversely, if a cashier forgets to record a $50 sale and ends the day noting only $20 in the drawer, they would have a “cash short” of $50.
Related Terms
- Cash Handling: The act of receiving, recording, and disbursing cash; requires accuracy to minimize discrepancies.
- Sales Discrepancy: A difference between expected revenue from sales and actual revenue collected.
Illustrative Diagram
graph TD;
A[Start of Day Cash] --> B[Cash Received];
B --> C[Cash Drawer Count];
C -->|Over| D[Cash Over];
C -->|Short| E[Cash Short];
D --> F[Adjust Cash Account];
E --> F;
Humorous Insights
- “I told the cashier I was $20 short. They handed me another $20 and said, ‘Go buy something nice!’ I guess they wanted to be a cash above average!”
- Fun Fact: The average cashier either gets over or short at least once a week. If only they had a magic cash machine!
Frequently Asked Questions
Q: Why do discrepancies occur? A: Errors can happen due to incorrect cash counting, miscommunication, or just plain ol’ human error—remember, even accountants are humans!
Q: What should a business do if they are consistently over and short? A: They might want to evaluate their cash handling procedures and increase staff training—a little cash control can go a long way!
Q: Is cash over short considered income? A: It’s debatable! While technically it shows you’ve more cash than expected, legally it’s classed as a temporary account until resolved, so no celebrating just yet!
References to Online Resources
Suggested Books for Further Studies
- “Accounting Made Simple” by Mike Piper
- “Financial Intelligence” by Karen Berman and Joe Knight
Test Your Knowledge: Over and Short Quiz
## What does "cash over" mean?
- [x] When cash exceeds what is documented
- [ ] When cash is less than what is documented
- [ ] When cash is perfectly accounted for
- [ ] When cash has a different format
> **Explanation:** "Cash over" refers to a situation where actual cash exceeds recorded cash. So, if your couch spits out $50 after cleaning, you’ve hit the “over” jackpot!
## What usually causes cash discrepancies?
- [ ] Customers stealing
- [x] Human error in cash handling
- [ ] A disgruntled former employee
- [ ] Ghosts enjoying retail therapy
> **Explanation:** Most discrepancies come from simple human errors in cash handling—not paranormal activity!
## If a store has a cash short of $30, what does that mean?
- [x] They have $30 less in the drawer than what they should
- [ ] They need to hire more cashiers
- [ ] They made a profit of $30
- [ ] They are über successful in selling $30 items
> **Explanation:** A cash short of $30 means the cash on hand is $30 less than the total expected, not that they’ve become a $30 profit machine!
## What is the journal entry for a cash over situation?
- [ ] Debit Cash, Credit Sales
- [ ] Debit Cash, Credit Cash Over Short
- [x] Debit Cash Over Short, Credit Cash
- [ ] There’s no journal entry, we just pretend it didn’t happen
> **Explanation:** When there’s cash over, you debit the cash over short account and credit the cash. Just like managing a surprise birthday party!
## What is the recommended action if cash over/short discrepancies become regular?
- [x] Review cash handling training
- [ ] Buy a new register
- [ ] Change business locations
- [ ] Raise employee wages
> **Explanation:** If discrepancies keep happening, it’s time to review training and cash handling processes rather than just moving your business to an abandoned warehouse!
## What type of businesses most often face cash over short situations?
- [x] Retail and banking businesses
- [ ] Sushi restaurants
- [ ] There are no such businesses
- [ ] Online-only businesses
> **Explanation:** Cash over short is predominately seen in cash-intensive businesses like retail and banking—sushi restaurants are too busy focusing on the taste!
## True or False: Frequent cash discrepancies indicate serious fraud.
- [ ] True
- [x] False
- [ ] Only if it involves low-quality nachos
- [ ] Only if someone wearing a ski mask is involved
> **Explanation:** While frequent discrepancies can raise suspicion, they more often simply indicate clerical errors, as fun and improbable as robberies in nacho shops may sound!
## In a cash count, how should you resolve a shortage?
- [ ] Ignore it and blame the customers
- [x] Investigate the reason and make necessary adjustments
- [ ] Start accepting only credit cards
- [ ] Call in paranormal investigators immediately
> **Explanation:** Investigating is key! You might discover it was just a misplaced $50 bill under the register rather than ghosts at work.
## Why is it important to account for cash over/short?
- [ ] It helps improve cashier morale
- [ ] It keeps shareholders guessing
- [x] It ensures accurate financial records
- [ ] Cashiers like to have a gossip session about it
> **Explanation:** Keeping track helps maintain accurate financial records, showing you’re not just winging it while juggling bouncy balls!
## What should be done with excessive cash over short entries?
- [ ] Celebrate and go on vacation
- [ ] Consult an accountant or bookkeeper
- [x] Investigate possible reasons and correct the processes
- [ ] Write a best-selling book about “Your Over Buddies”
> **Explanation:** Investigating discrepancies helps refine cash handling processes and avoids painful encounters with your accountant!
Thank you for diving deep into the delightful world of accounting disputes. Remember, cash flow is like humor—keep it positive, or you might find yourself cashing out on the punchline!
