The Cash Over and Short Account

question 9

Multiple Choice

The Cash Over and Short account:

• A) Is used to record a credit balance in the cash account.
• B) Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and missing petty cash receipts.
• C) Is not necessary in a computerized accounting system.
• D) Is an income statement account used for recording the income effects of cash overages and cash shortages from errors in making change and missing petty cash receipts and is not necessary in a computerized accounting system.
• E) None of these answers is correct.

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Definitions:

Credit Policy

A set of guidelines that a company follows to determine credit terms for customers, such as payment period and discount rates.

Discounted Price

Discounted Price refers to a price that has been reduced from the original or listed cost, often to accelerate sale or clearance or as part of promotional offers.

Credit Terms

Credit terms are the payment conditions imposed by suppliers on customers, including the amount of time allowed to pay off the amount due.

Goods

Tangible items that are produced or manufactured for sale to consumers or other businesses.