Question
Alabama Industries manufactures and wholesales small tools. It sells the tools to a large group of regular customers and makes most sales by telephone to
Alabama Industries manufactures and wholesales small tools. It sells the tools to a large group of regular customers and makes most sales by telephone to this group. Additionally, it receives orders online from its sales team, who sign up new customers within the sales area. In the past, Alabama Industries has had trouble with customers who do not pay their accounts on time. Despite instructing the sales team not to make sales to customers before their credit worthiness has been assessed, sales are still being made to new customers before their limits have been set and to existing customers beyond their credit limit. Also, the economic situation has started to impact Alabamas customers, and management is concerned about the possibility of increasing bad debts. What steps should Alabama take to help reduce the concern about increasing bad debts? check all that applies
a preventive control should be implemented
a detective control should be implemented
an automated control would help ensure credit sales are not made to customers before assessing their creditworthiness
employees need to be reminded so that the manual control is sufficient
the auditor should pre-approve all sales on account
Alabama should accept cash only
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