Final answer:
A 'Change Fund' does not track daily cash shortages or overages; such transactions are recorded in a 'Cash Over and Short' account, used for managing cash flow variances and maintaining financial control.
Step-by-step explanation:
The statement that a special ledger account entitled "Change Fund" is used to keep track of day-to-day shortages and overages of cash is false. A Change Fund is typically used to manage a fixed amount of cash for making change in cash transactions. Any shortages and overages would usually be recorded in a different account, such as a Cash Over and Short account, which is part of a company's general ledger and used to record discrepancies between actual cash received and recorded sales. This account helps in managing the cash flow and maintaining financial control.
Key Concepts and Summary
The Cash Over and Short account reflects a deficit or surplus that occasionally arises from errors in cash transactions. It is more like a clearing account for the variances between expected cash amounts and actual cash amounts from daily operations. For accounting purposes, discrepancies noted in this account will impact the balance sheet and profit and loss statement.