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 clerk has asked you to open an account named New Expenses. You know that an account name should be specific and well defined. You feel that the A/P clerk might want to charge some expenses to that account that would not be appropriate. Why do you think the A/P clerk needs this New Expenses account

It's important to explain to the accounts payable clerk that the account title is inappropriate and therefore needs to be specific with the name.

If the accounts payable clerk doesn't understand, he should be told to show the source document for the expenses incurred like a check, invoice, etc so that the proper name of the account can be decided.

There isn't any reason to be suspicious because the clerk doesn't understand much about accounting. In a situation where he still insists on the account name, then the information should be reported to higher authorities.

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There are a number of reasons, the A/P clerk could want this New Expenses account to be opened with some of them being suspicious and some of them being out of a lack of knowledge.

Assuming it is the latter (no need to be suspicious, yet), the A/P might not know that expenses accounts should be specific and well defined and so just assumed that New Expenses would serve them well.

You should explain to them how the naming of accounts is done and ask them for the Source document so you can see what name to give the new account.

If the A/P is being uncooperative, it is time to be suspicious and to clarify the issue with the superior of the clerk so as to avoid any issues with the company's books.

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