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?

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter5: Completing The Accounting Cycle
Section: Chapter Questions
Problem 3EB: For each of the following accounts, identify whether it would be closed at year-end (yes or no) and...
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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.

 

  • 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?
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