Management Tools-Completing the Accounting Cycle - Discussion

Topic: Scenario - Gail and Garry

The following is an excerpt from a telephone conversation between Gail Richie, President of Flanders Supplies Co., and Gary Weir, owner of On-Time Employment Co.

Gail: Gary, you're going to have to do a better job of finding me a new computer programmer. That last guy was great at programming, but he had no common sense.

Gary: What do you mean? The guy had a master's degree with straight A's.

Gail: Yes, well, last month he developed a new financial reporting system. He said we could do away with manually preparing a work sheet and financial statement. The computer would automatically generate our financial statements with "a push of a button."

Gary: So what's the big deal? Sounds to me like it would save you time and effort.

Gail: Right! The balance sheet showed a minus for supplies!

Gary: Minus supplies? How can that be?

Gail: That's what I asked.

Gary: So, what did he say?

Gail: Well, after he checked the program, he said that it must be right. The minuses were greater than the pluses...

Gary: Didn't he know that supplies can't have a credit balance-it must have a debit balance?

Gail: He asked me what a debit and credit were.

Gary. I see your point.

Comment on (a) the desirability of computerizing Flanders Supplies financial reporting system, (b) the elimination of the work sheet in a computerized accounting system, and (c) the computer programmer's lack of accounting knowledge.