Purpose: To help you understand the importance of cash flows in the operation of a small business.
Question:
You start to think back over some of the observations you’ve made recently and some of the conversations you've overheard, and one startling conclusion is staring you in the face. Joe’s been a good employee, but lately he’s been bragging about his wild weekends and some of the gambling casinos he’s been going to. Joe never used to be like that. You overheard one of his fellow employees ask him where he’s getting all this money, and he said that his wife just got a really good raise at her job and they’re celebrating. Then just last week, Joe drove to work in a new sports car and again you overheard him tell someone about the great deal his brother-in-law got for him on this car.
Joe is in charge of billing and collecting. Since your office is so small, you always felt like these two jobs could be done more efficiently by the same person. You also remember that Joe’s uncle is one of your vendors and there was that situation last year where you discovered a double billing to his uncle’s company. When you brought it to Joe’s attention, he immediately admitted his error and took care of it.
Requirement
Respond to the following: You are wondering whether or not you should call Joe into your office and have a talk with him, or just observe a little bit more to see if you can discover any irregularities in Joe’s area.
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Step by Step Answer:
Related Book For
Financial Accounting
ISBN: 978-0132889711
1st Canadian Edition
Authors: Jeffrey Waybright, Liang Hsuan Chen, Rhonda Pyper
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