At Forrest Industries, All Sales Are on Account

question 170

Essay

At Forrest Industries, all sales are on account. Sienna Marcos is responsible for mailing invoices to customers, recording the amount billed, opening mail, recording the payment, and making deposits to the bank. Sienna is very devoted to the family business and never takes off more than one or two days for a long weekend. The customers know Sienna and sometimes send personal notes with their payments. Another clerk handles all aspects of accounts payable. Sienna's brother, who is president of Forrest Industries, has hired an accountant to help with expansion.
REQUIRED:
1. List some problems with the current accounts receivable system.
2. What suggestions would you make to improve internal control?
3. How would you explain to Sienna that she personally is not the problem?

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Definitions:

Production Possibilities Frontier

A visual that outlines every conceivable highest production level for a duo of items, taking into account inputs like resources and other contributing elements.

Government Regulations

Rules or laws established by governments to control and guide the operations of businesses and individuals with the aim of protecting public interest.

Macroeconomics

The branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, including issues like economic growth, inflation, and unemployment.

Normative Statements

Statements that express value judgments or opinions about what ought to be rather than statements of fact.