Your restaurant business has grown and you are no longer able to manage all accounting functions. You hire Tom, an experienced bookkeeper, who is…

Your restaurant business has grown and you are no longer able to manage all accounting functions. You hire Tom, an experienced bookkeeper, who is great at what he does. One day, Tom notices that one of the waitress’ registers is out of balance after a busy shift. He looks through the register and notices that the waitress charged the wrong amount of money for a large group. Instead of charging $130.57 for the group’s meal, she charged $103.57.

A few weeks later, Tom notices the issue again with the same waitress. It looks like she has developed a pattern of transposing dollar amounts on several different occasions for groups with large payments. On the last occasion, she charged $250.23 for a $205.23 bill. Tom investigates and tells you that the waitress is ringing up these bills with wrong prices for another employee. 

1.   How can transposition errors impact cash flow at your business?

2.   Do you think the error was intentional based on the information you received from Tom? Why or why not?

3.   Should these errors be reflected in financial statements? Why or why not?