If the amount on hand in petty cash is more than the recorded amount, petty cash is short.

If the amount on hand in petty cash is more than the recorded amount, petty cash is short.

• A. True
• B. False
• C. Overages indicate excess on hand
• D. Shortage occurs only with negative balance

Answer: (C)

Understanding petty cash discrepancies helps you know what the numbers mean. When the cash on hand is higher than what the ledger records, you have an overage (an excess on hand), not a shortage. A shortage would occur if the on-hand amount were less than the recorded balance. So the situation described fits the idea that overages indicate excess on hand, making that the correct interpretation. The idea that petty cash is short applies only when the on-hand cash falls short of the recorded amount, not when there is more on hand.

Understanding petty cash discrepancies helps you know what the numbers mean. When the cash on hand is higher than what the ledger records, you have an overage (an excess on hand), not a shortage. A shortage would occur if the on-hand amount were less than the recorded balance. So the situation described fits the idea that overages indicate excess on hand, making that the correct interpretation. The idea that petty cash is short applies only when the on-hand cash falls short of the recorded amount, not when there is more on hand.