Management Chapter 14
control
A company is said to lack _____ when there is an absence of policies and a lack of periodic reviews
Debt-equity ratio
A leverage ratio that indicates the company's ability to meet its long-term financial obligations
Current ratio
A liquidity ratio that indicates the extent to which short term assets can decline and still be adequate to pay short-term liabilities
Principle of exception
A managerial principle stating that control is enhanced by concentrating on the exceptions to or significant deviations from the expected result or standard.
Activity-based costing (ABC)
A method of cost accounting designed to identify streams of activity and then to allocate costs across particular business processes according to the amount of time employees devote to particular activities
Internal audit
A periodic assessment of a company's own planning, organizing, leading, and controlling processes.
Return on investment (ROI)
A ratio of profit to capital used, or a rate of return from capital
balance sheet.
A report that shows the financial picture of a company at a given time and itemizes assets, liabilities and stockholders' equity is referred to as a(n):
Balance sheet
A report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders' equity.
external audit.
An evaluation conducted by one organization of another organization is referred to as a(n):
External audit
An evaluation conducted by one organization, such as a CPA firm, on another.
Management audit
An evaluation of the effectiveness and efficiency of various systems within an organization
profit and loss statement.
An itemized financial document of the income and the expenses of a company's operations is known as the:
Profit and loss statement
An itemized financial statement of the income and expenses of a company's operations
Control
Any process that directs the activities of individuals toward the achievement of organizational goals
Market control
Control based on the use of pricing mechanisms and economic information to regulate activities within organizations
Liquidity ratios
Current and debt-equity ratio
Management myopia
Focusing on short-term earnings and profits at the expense of longer-term strategic obligations.
Accounting audits
Procedures used to verify accounting reports and statements.
Profitability ratio
Return on invesment
concurrent
The control process used while plans are being carried out, including directing, monitoring, and fine-tuning activities as they are performed is known as _____ control.
taking action to correct problems.
The last step in a typical control system is:
current ratio.
The most common liquidity ratio is current assets to current liabilities, known as the:
transfer price.
The price charged by one unit in an organization for a good or service that it supplies to another unit in the same organization is referred to as a(n):
Budgeting
The process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences
Bureaucratic control
The use of rules, regulations, and authority to guide performance
bureaucratic
The use of rules, regulations, and authority to guide performance is referred to as _____ control.
Assets
The values of the various items the corporation owns.
tactical behavior.
When employees feel forced to attempt to "beat the system," their behavior is known as:
Cost budget
Which of the following budgets is used for areas of the organization that incur expenses but no revenue?
Concurrent control
Which type of bureaucratic control takes place while plans are being carried out?
Debt-equity ratio
_____ indicates the company's ability to meet its long-term financial obligations.
Stockholders' equity
_____ is the amount accruing to the corporation's owners.
Benchmarking
_____ is the process of comparing a firm's practices and technologies with those of other organizations.
Leverage ratios
_____ show the relative amount of funds in the business supplied by creditors and shareholders.
Production budget
expressed in physical units.
Cost budget
is used for areas of the organization that incur expenses, but bring in no revenue, such as accounting, HR, Legal, etc.
Capital budget
is used for the cost of fixed assets such as plant and equipment.
Balanced scorecard
performance measures: financial, customer, business process, and learning and growth
Feedforward Control
the control process used before operations begin, including policies, procedures, and rules designed to ensure that planned activities are carried out properly
Sales budget
usually prepared by month, sales area, and product.
clan control.
Control based on the norms, values, shared goals, and trust among group members is referred to as:
Clan control
Control based on the norms, values, shared goals, and trust among group members.
planning
Control and _____ have been called the Siamese twins of management.
Standard
Expected performance for a given goal: a target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed.
principle of exception
The _____ states that control is enhanced by concentrating on the exceptions to, or significant deviations from, the expected result or standard
Stockholders' equity
The amount accruing to the corporation's owners.
Liabilities
The amounts a corporation owes to various creditors
Feedback Control
control that focuses on the use of information about previous results to correct deviations from the acceptable standard.
Master budget
includes all major activities of the business.
Cash budget
is prepared after all other budget estimates are completed.
Concurrent Control
is the control process used while plans are being carried out, including directing, monitoring, and fine-tuning activities as they are performed.