As the bookkeeper of a new start-up company, you are responsible for keeping the chart of accounts...

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?

Nitish Lath · Accepted Answer

Case study analysis:
In the case, the accounts payable clerk wants to open new expense account without specifying the nomenclature or nature of expenses account which is not correct. The clerk may be wants to record the expenses which are different in nature and not able to classify the nature of transactions properly. We need to explain to accountant that account title for recording the expenses is not correct and he should define the specific name for expense account based on nature of expense.

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...

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