Consider the situation that was presented in the Small Business Analysis. Your client had two concerns that she asked you about. The first one is that she was concerned that her Cash balance had a credit balance instead of a debit balance. And even after the corrections were made, the Cash balance was still a credit. The second concern she had was how to record transactions when she uses her debit card as opposed to transactions when she uses her credit card.

Write a short memo or letter to your client addressing these two situations and what you would consider to be the proper accounting treatment for each of the two. More specifically, if the Cash account was showing as a credit balance, how would that have happened? Is it possible for that to happen? And regarding the use of the debit card versus the credit card, from the information contained in the chapter, explain the difference between the two types of cards and how each transaction should be recorded from an accounting point of view.

  • CreatedApril 29, 2014
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