Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Management must have control over which of the following?

1. Sales on credit made to new customers

2. Marketing strategies for new products

3. Public relations campaigns

4. Competitor analysis reports

The correct answer is: Sales on credit made to new customers

Management must have control over sales on credit made to new customers because this directly relates to the company's credit risk and cash flow management. Effectively managing credit sales is essential for ensuring that the organization does not extend too much credit to customers who may default, which could lead to significant financial losses. By maintaining control in this area, management can set credit limits, evaluate customer creditworthiness, and monitor accounts receivable to mitigate risks associated with bad debts. This level of control is crucial for maintaining the financial health of the business, contributing to short-term liquidity, and ensuring that the company can meet its operational obligations. While marketing strategies, public relations campaigns, and competitor analysis are important aspects of business strategy, they do not involve the immediate financial repercussions and risk mitigation associated with credit sales to new customers.