Over and Short

Over and Short: Meaning in Accounting

Over and short (often called “cash over short”) refers to a discrepancy between a business’s recorded cash receipts and the actual cash on hand. The term also names a general ledger account used to track these differences.

Where it commonly appears

• Cash-intensive operations such as retail stores, banks, restaurants, and any business that handles petty cash.
• Situations involving cashiers, tellers, or manual cash counts where human error or tampering can create mismatches.

How it’s recorded

The cash-over-short account is an income-statement account that records the net effect of cash discrepancies:
– A net credit balance (more cash than recorded sales) increases income.
– A net debit balance (less cash than recorded sales) reduces income.

Example journal entries:
– Cash over (extra cash collected):
– Debit Cash $96
– Credit Sales $95
– Credit Cash Over and Short $1
– Cash short (less cash collected):
– Debit Cash $94
– Debit Cash Over and Short $1
– Credit Sales $95

Common causes

• Human error: misringing sales, miscounting cash, or data-entry mistakes.
• Equipment or system errors: malfunctioning registers or POS rounding.
• Internal fraud or theft, though this is less common than accidental errors.

Purpose and control value

• The cash-over-short account serves as a detective control: it consolidates variances so management can spot trends or problems.
• Regular review helps identify operational weaknesses and possible fraud.

Reducing over-and-short occurrences

Practical controls and procedures include:
– Reconciliations at shift end and daily deposit verification.
– Segregation of duties (separate cashiering, reconciliation, and deposit preparation).
– Use of reliable POS systems and secure tills.
– Surprise cash counts and periodic audits.
– Staff training on cash-handling procedures and proper reconciliation steps.

Key takeaways

• “Over and short” signals mismatches between recorded sales and actual cash.
• It’s tracked in a cash-over-short account on the income statement.
• Most discrepancies stem from human error; controls and reconciliations help reduce and detect problems.