On a recent trip to Brazil, Carlo degas, sales manager of cyber systems, took his along for a vacation and included her airfare and meals on his expense report, which he submitted for reimbursement. Chelsea Brindley, vice president of sales and Degas boss thought his total travel and entertainment expenses seemed excessive. However, Brindley approved the reinmbursement becasue she owed Degas a favour. Brindley, well aware that the company president routinely reviewed all expenses record in the cash payments journal, had the accountant record the expenses of Degas wife in the general journal as follows:
Sales Promotion Expense 7500
Cash 7500
Questions
1) Does recording transaction in the general journal rather that in the cash payments journal affect the amounts of cash and total expenses reported in the financial statements?
2) Why did Ms. Brindley want this transaction recorded in gerneral journal?
3) What is the ethical issue in this situation? What role does accounting play in the ethical issue?
1 answer