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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

When the cash short and over account has a debit balance at the end of the month, it is considered

  1. (a) an expense.
  2. (b) an asset.
  3. (c) revenue.
  4. (d) a liability.

To determine

Identify the account that will be considered when cash short and over account has a debit balance at the end of the month.

Explanation

Cash short and over:

Cash Short and Over is an income statement (expense or revenue) account used to record shortage or overage of cash. The increase (overage) is credited and recorded as Revenue, and decrease (shortage) is debited and recorded as Expense.

Justification for the incorrect answer:

Option b:

Cash Short and Over are not considered as asset when the account shows a debit balance at the end of the month as the cash short and over account is an income statement (expense or revenue) account and it is used to record shortage or overage of cash. Therefore, Option b is an incorrect answer.

Option c:

Cash Short and Over is an income statement (expense or revenue) account used to record shortage or overage of cash. Cash short and over account will be denoted as revenue only when the cash short and over account has overage of cash (credit balance) at the end of the month...

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