Question

Read the scenario below and answer the following question.

Chen at Chen Construction works on new neighbourhood developments that take many months to complete. They often cross a fiscal year. He typically requires a deposit from the homeowners. When a 3rd customer called to complain that they had recently overpaid for a home build, Chen discovered that their $200,000 deposit was still sitting in the Customer Deposits liability account. Due to this and other errors, he has just fired his bookkeeper and hired you to review and fix his books. He's looking for you to advise him on correct procedures to use going forward.
What step was missed from the workflow to cause this scenario?

Answer 1

Based on the scenario provided, it appears that the step of reconciling the Customer Deposits liability account was missed, which led to the $200,000 deposit still sitting in the account and the subsequent complaints from customers about overpayment.