Question

Respond to the following in a minimum of 175 words:

As the full-time bookkeeper, your job is to make any corrections to the general ledger accounts. Each correction needs the reason for the change and the effect on each account, whether it is an increase or decrease.

For the third time this month, a co-worker has recorded a cash receipt twice and wants you to record a correcting entry that will reverse the mistakes. The correcting entry will record a credit to the Cash account and a debit to the Sales account. Your co-worker has offered to buy you dinner for fixing this mistake.

What should you investigate before making a decision about the correcting entry? What is happening to the Cash account? Would you accept a dinner offer from your co-worker for fixing the mistake?

Answer 1

Answer :

In the given situation, before making a decision about the correcting entry, the reasons for the cash receipt must be investigated. It must be looked as to why is the cash receipt being recorded the second time. Also, in the correcting entry, cash account must be credited, to reverse the effect and rectify the mistake, since receipt has been recorded twice which implies that cash account must have been debited twice. Correspondingly, sales account must be debited, which indicates sales return. Here, the reasons for sales return must be looked into except for the sales that are made on approval basis, for which sales are recorded after acceptance made by the respective buyer. Also, in certain cases, the buyers can be contacted and their feedback can be obtained so as to help the business improve its processes, products or services and reduce such chances of customer dissatisfaction.

Also, in such a situation, I shall not accept a dinner offer from my co-worker, since it would be against the principles and ethics that must be followed in an organisation. Such informal dinners are still alright casually, but accepting an offer so as to cover up the mistake committed during the course of book keeping, is not in the interest of the business, as such a meeting could also lead to more callousness and a sense of ease which must never be in business as this could lead to the same situations and mistakes arising again.