ACCT Question 4
Read the following sceanario and answer the quetions below. Minimum 250 words; 2 references, no format required.
Jas Carillo was discussing summer employment with Maria Perez, president of Valparaiso Construction Service:
Maria: Iâ€™m glad that youâ€™re thinking about joining us for the summer. We could certainly use the help.
Jas: Sounds good. I enjoy outdoor work, and I could use the money to help with next yearâ€™s school expenses.
Maria: Iâ€™ve got a plan that can help you out on that. As you know, Iâ€™ll pay you $4 per hour; but in addition, Iâ€™d like to pay you with cash. Since youâ€™re only working for the summer, it really doesnâ€™t make sense for me to go to the trouble of formally putting you on our payroll system. In fact, I do some jobs for my clients on a strictly cash basis, so it would be easy to just pay you that way.
Jas: Well, thatâ€™s a bit unusual, but I guess money is money.
Maria: Yeah, not only that, itâ€™s tax-free!
Jas: What do you mean?
Maria: Didnâ€™t you know? Any money that you receive in cash is not reported to the IRS on a W-2 form; therefore, the IRS doesnâ€™t know about the incomeâ€”hence, itâ€™s the same as tax-free earnings.
a. Why does Maria Perez want to conduct business transactions using cash (not check or credit card)?
b. How should Jas respond to Mariaâ€™s suggestion?