Question

The debit balance in Cash Short and Over temporary accounts at the end of an accounting period will result in AJE and is reported as

a. an expense on the income statement
b. a liability on the balance sheet
c. an asset on the balance sheet
d. income on the income statement

Answer 1

A debit balance in Cash Short and Over at the end of an accounting period is reported as an expense on the income statement.

Step-by-step explanation:

The debit balance in Cash Short and Over accounts at the end of an accounting period indicates that the amounts of cash on hand are less than what should be present according to the accounting records. This discrepancy is commonly reported as an expense on the income statement. When adjusting entries are made, if the cash is short, the Cash Short and Over account is debited, and if cash is over, the account is credited. As part of temporary accounts, at the end of the period, the balance of the Cash Short and Over account is closed to the income statement. Hence, a debit balance would result in additional expenses being listed on the income statement.