Case Study:

David DeMarkey runs a computer repair service. He has not been thorough in keeping records of transactions to use as the basis for journal entries, but he is interested in trying to be accurate in what he records. Thus, he asks you, a current student of accounting, to look over his records and give your opinion about the system he is using.

You immediately find an entry in his journal for the receipt of cash for services performed in the amount of $250, but you find no document to support the entry. When you ask David about it, he replies, Thats how I remember it.

Directions:

Write an explanation of what David is doing wrong. What accounting principle is he violating and why is he violating it?

Paradigm Publishing, Inc. 5^th Edition College Accounting, Robert L Dansby, Burton S Kaliski, Michael D Lawrence.