Bookkeeping · Reconciliation & Close · Brief · Intro level
Cash drawer reconciliation: the daily count and the over/short account
Count the drawer at close, compare it to what the register says you took in, and book any difference to Cash over and short. Here is the daily routine and the entries.
A cash drawer reconciles the same way a bank account does, just faster: what the records say you should have versus what is actually there, every day, while the person who ran the till is still in the building. The rule that makes it work is simple — sales are what the register says, cash is what you count, and the difference goes to its own account, Cash over and short.
The daily routine
- Start with a fixed float — say 150 in small bills and coin. Same amount every morning, counted by the person opening.
- Close by counting the whole drawer. Two people is better than one; the counter should not be the only person who ran the till.
- Subtract the float. What remains should equal the register's cash-sales total for the day (cash sales, minus cash refunds and paid-outs).
- Record the deposit at the counted amount and route any difference to Cash over and short.
- Log it. A one-line daily log — date, expected, counted, over/short, initials — is the audit trail.
The entries
The register says 842 in cash sales; the drawer, after the float, holds 838. Four dollars short:
| Account | Debit | Credit |
|---|---|---|
| Cash — checking (deposit) | 838 | |
| Cash over and short | 4 | |
| Sales revenue | 842 |
Sales are recorded as rung. The 4 shortage is an expense, not a sales adjustment.
On an over day — drawer holds 851 against 842 rung — the difference lands as a credit:
| Account | Debit | Credit |
|---|---|---|
| Cash — checking (deposit) | 851 | |
| Sales revenue | 842 | |
| Cash over and short | 9 |
Overages are not free money; they usually mean a customer got shorted or a sale wasn't rung.
If sales tax rides on the transaction, the register report splits it and the credit side splits accordingly — the mechanics follow sales tax payable basics.
Reading the over/short account
Cash over and short is a thermometer. A balance that wobbles a few dollars around zero is a healthy cash business. Watch for:
- Always short — change-making errors run both directions; one-directional differences don't.
- Same shift, same pattern — the log tells you whose drawer, which is the point of one-drawer-one-person custody.
- Round numbers — a drawer exactly 20 short is rarely arithmetic.
The remedy is custody, not accounting: one person per drawer per shift, counts at every handoff, and the counter separated from the seller where staffing allows — the same separation-of-duties logic as internal controls for small businesses.
What to do next
- Fix the float amount in writing and start a daily count log.
- Set up a Cash over and short account and use it for every difference, however small.
- Review the account's running balance monthly; investigate patterns, not pennies.
Frequently asked questions
- How do you reconcile a cash drawer at the end of the day?
- Count the drawer, subtract the fixed starting float, and compare the result to the register or point-of-sale report of cash sales. If they match, deposit the cash sales amount and reset the float. If they differ, record the actual cash counted and book the difference to a Cash over and short account — never adjust the sales figure to match the drawer.
- What is the Cash over and short account?
- Cash over and short is a small P&L account that absorbs the daily differences between counted cash and recorded cash sales. Shortages are debits (an expense), overages are credits. It keeps the books honest: sales stay as the register recorded them, cash stays as counted, and the account shows how well cash handling is working.
- How much cash over or short is normal?
- Occasional small differences — a few dollars either way from change-making errors — are normal in any cash business. What matters is the pattern: differences that grow, recur on the same shifts, or always run short signal a training or theft problem. The account's running balance is the control; review it monthly.