Question

As the bookkeeper of a new start-up company, you are responsible for keeping the chart of accounts up to date. At the end of each year, you analyze the accounts to verify that each account should be active for accumulation of costs, revenues, and expenses.

In July, the accounts payable (A/P) clerk asked you to open an account named New Expenses. You know that an account name should be specific and well defined, and you're afraid the A/P clerk might charge some expenses to the account that are inappropriate.

Respond to the following in a minimum of 175 words:

• Why do you think the A/P clerk needs the New Expenses account?
• Who needs to know this information and what action should you consider?

Answer 1

Answer :

Do not open the account New Expenses without approval from the controller. You must identify the purpose, nature and relationship of expenses to the business and the amounts are consistent with the purpose. You should also identify any expenses of such type with proper bills and why the payables clerk wants to open the New Expense account. If anything comes up suspicious like fake bills you should inform the controller. If the account is not monitored, the Accounts Payable clerk might enter personal expenses, which would not be appropriate