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Donna Is an Unsupervised Outside Salesperson for a Small Electronics

question 56

Essay

Donna is an unsupervised outside salesperson for a small electronics firm. Instead of working on commission, Donna is a salaried employee. What issue may this compensation arrangement lead to? Give a possible solution.


Definitions:

Matching Principle

An accounting principle that dictates expenses should be reported in the same period as the revenues they help to generate, to ensure financial statements accurately reflect business activities.

Bad Debts

Amounts owed to a company that are considered uncollectible, leading to their classification as a loss.

Bankruptcy

A legal process through which individuals or businesses unable to meet their debt obligations can seek relief from some or all of their debts.

Uncollectible

Refers to accounts receivable or loans that are not expected to be collected due to the borrower's inability to pay.

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