Accounting In Action Business Insight Until Sam Walton had opened twenty Wal-Mart stores, he used…

Accounting In Action Business Insight

Until Sam Walton had opened twenty Wal-Mart stores, he used what he called the “ESP method” of closing the books. ESP was a pretty basic method: If the books didn’t balance, Walton calculated the amount by which they were off and entered that amount under the heading ESP—which stood for “Error Some Place.” As Walton noted, “It really sped things along when it came time to close those books.” How did Sam Walton know the “books didn’t balance”? In what circumstances today might the ESP method be acceptable?