Accounts receivable and inventory are both assets, reported in the Current Assets section of the Balance Sheet. In most non-manufacturing businesses, these are the most valuable assets owned by the business. Therefore, they warrant, and typically get, significant management attention.

While Fixed Assets, or Property, Plant and Equipment (PP&E), are typically the most valuable asset class in manufacturing businesses, they do not typically get as much management attention as accounts receivable or inventory. Why is that? Is that a prudent management decision? Explain.

Internal controls are “the policies and procedures used to safeguard assets, ensure accurate business information, and ensure compliance with laws and regulations.” (Warren, p190) What are some of the risks that need to be managed, in each of the above three asset classes, in order to safeguard these assets? What internal controls would be employed to do so?