Zorro Inc.has the following cash register data for December 31: Cash register total for cash sales
$23,500
Cash receipts from cash sales
$23,480
How should the difference be recorded?
A) $20 cash overage as miscellaneous operating expense
B) $20 cash overage as revenue
C) $20 cash shortage as normal operating expense
D) $20 cash shortage as other revenue

Question

Quizplus · Accepted Answer

If the cash receipts from cash sales were lower than the cash register total for cash sales, there would be a cash shortage. Since the cash receipts are higher, there is a cash overage. This is not considered revenue because it is not earned from operations or sales, but rather a discrepancy in the amount of cash collected versus the amount recorded on the register. Therefore, the difference should be recorded as a normal operating expense, reflecting the discrepancy between the cash collected and the amount recorded on the register. Option A and B are incorrect because the $20 overage is not a source of revenue or operating expense. Option D is incorrect because the overage is not revenue, but rather an expense (shortage) to Zorro Inc.

Zorro IncHas the Following Cash Register Data for December 31: Cash