MGMT 16

______ control helps managers by providing accurate and timely information regarding customers' reactions to goods and services.

Feedback

______ control occurs before operations begin and allows managers to look ahead to anticipate problems before they arise.

Feedforward

Which pieces of information can you learn from a business's cash budget?

How much cash is available How much income and expenses the business expects How much working capital is available

______ ratios reveal whether a business is able to cover short-term debts.

Liquidity

______ helps an organization recognize streams of activity and assign costs according to the time spent on particular activities.

Activity-based costing

______ is a method of cost accounting that allocates costs across business processes rather than functions.

Activity-based costing

______ establishes relationships among feedforward control, concurrent control, and feedback control.

Budgetary control

______ are equal to liabilities plus stockholder's equity.

Assets

In order to design an effective control system, which elements should be included?

Ensure acceptability to employees. Encourage open communication. Use multiple approaches.

The budgetary control proceeds through three stages. Identify the stages from first to last, with the first step at the top.

Establishing Expectancies Budgetary Operations Reinforcing Successes

______ can result in rigid, inflexible behavior geared toward doing only what the system demands.

Rigid bureaucratic control

______ occurs when control systems prompt employees to follow the rules to an extreme that stifles creativity.

Rigid bureaucratic control

Which statement about cost budgets is true?

They are used for areas that incur expenses but no revenue.

______ price is a type of business-unit level market control used to regulate exchanges among departments and functions.

Transfer

Employees are less likely to resist a control system and exhibit dysfunctional behaviors if they accept the system.

True

The values of the items a firm owns are called ______.

assets

Which type of control helps managers deal with problems as they are occurring?

concurrent

Which are approaches to bureaucratic control?

concurrent control feedback control feedforward control

Effective managers make sure that activities are going as planned through ______, any process that directs activities toward organizational goals.

control

The ______ budget is used for areas of the organization that incur expenses but no revenue, such as human resources and other support departments.

cost

What is the most common liquidity ratio?

current ratio

In order to establish reasonable standards and gain employee acceptance, ______.

employees should be allowed to participate in setting standards

The first step of the budgetary control process involves ______.

estimating sales budget approval and publication the broad plan for the company

The managerial principle that states that control is enhanced by concentrating on the exceptions to the standard is known as the principle of ______.

exception

In a decentralized organization in which department managers have control over both revenue and expense, a profit and loss statement will most likely be used for each department. In this type of organization the _______ is the standard for measuring a department's performance.

expected net income

When an organization conducts an evaluation of another organization, it is called a(n) ______ audit.

external

Match the approach to bureaucratic control to its definition.

feedforward > includes policies, procedures and rules designed to ensure that planned activities are carried out properly concurrent > includes directing, monitoring, and fine-tuning activities as they occur feedback > corrects deviations from the acceptable standard after they arise

Control systems generally include ______ performance targets and incorporate aspects of preliminary, concurrent, and feedback control.

financial and nonfinancial

A bureaucratic control includes ______.

formal rules legitimate authority regulations performance appraisals

Feedforward control is ______ oriented.

future

With the six sigma control process, the goal is to ______.

have the least amount of defects

A standard is a target that organizations use to ______.

motivate performance among employees establish a desired performance level benchmark actual performance

In the third step of the control process, managers evaluate actual ____.

performance

What three types of potential employee responses to control should managers consider?

tactical behavior rigid bureaucratic behavior resistance to control

The balance sheet shows assets, liabilities, and stockholders' equity, the latter of which is defined as ______.

the amount accruing to the corporation's owners

What are liabilities?

the amounts that a corporation owes to various creditors

Which control system includes performance standards regarding finances, customers, business processes, and learning?

the balanced scorecard

The last step of the control process is ______.

to take action that will correct significant deviations

When designing a control system, managers should remember ______.

to use multiple types of controls

What type of market control provides a natural incentive to keep costs down and quality up?

transfer price

To measure performance levels, managers can count which of the following?

websites viewed days absent units produced

Performance data is commonly obtained from both ______ reports, in addition to personal observation.

written and oral

______ control is the use of rules, regulations, and authority to guide performance.

Bureaucratic

True or false: Six Sigma always helps to improve the bottom line of an organization.

False

An itemized financial statement of income and expenses is a(n) ______.

profit and loss statement

Fixating on ______ and profits while neglecting long-term strategy is known as management myopia.

short-term earnings

Which of the following is NOT a feature for designing an effective control system?

specifying organizational mission objectives

A ______ is the targeted level of performance for a given goal.

standard

The amount accruing to a corporation's owners is known as ______.

stockholders' equity

A balance sheet itemizes which of the following?

stockholders' equity liabilities assets

Why is it no longer sufficient to base control systems entirely on bureaucratic and market mechanisms?

Managers do not necessarily know each job better than employees do. Employees' jobs have become more complex and intellectual. Employees' relationship to their work has changed.

______ affect performance via economic forces and pricing mechanisms.

Market controls

True or false: Organizations can use individual-level market controls to influence the wages employees expect to receive and the rate organizations are likely to pay.

True

When is concurrent control used?

While plans are being carried out

A firm's budget is developed for ______.

a specific time period

n addition to budgets, businesses commonly use the --- sheet and the profit and loss statement to help control overall organizational performance.

balance

The ______ summarizes the financial condition of a company at a specific time.

balance sheet

The master budget might also be thought of as the ______.

budget of budgets

The process of determining what an organization is doing and comparing the results to budget data is known as ______.

budgeting

Although formal _____ control systems are the most pervasive and most widely taught, they are not always the most efficient or flexible.

bureaucratic

Firms use ______ as a way of measuring progress toward set performance goals, and if necessary, to apply corrective measures.

bureaucratic control systems

During step four of the control process, where managers must assess whether or not performance standards have been met, managers _______.

can learn how to take corrective action going forward

Which type of budget typically treats costs as investments because of their long-term nature?

capital budget

Every business must have a _____ budget, which is calculated after all other budget estimates are finished.

cash

Supervisors are using feedback control when they ______.

check results to discover and correct improper performance

Which two of the following control systems tend to be the most flexible?

clan market

A balanced scorecard comprises which of the following sets of performance measures?

customer satisfaction financial business processes learning and growth

Control systems are an important method of constraining people's behavior and making their behavior predictable; however, they can also lead to ______.

dysfunctional behavior

Market controls at the ______ level can be used to determine employee wages.

individual

Managers are discovering that control systems based solely on bureaucratic and market mechanisms are ______ for directing today's workforce.

insufficient

Which steps may be included in an external audit?

investigating the soundness of a potential supplier evaluating other organizations that might be subject to merger or acquisition determining where a competitor is strong or weak

Funds that a corporation owes to its creditors are known as its ______.

liabilities

Placing too much emphasis on short-term income and profits instead of pursuing a longer-term strategy is known as ______.

management myopia

Which type of control relies on economic forces?

market

What type of budget brings together and coordinates other budgets from all of a company's main activities?

master

Effective control systems ______.

maximize potential benefits and minimize dysfunctional behaviors

Which items are typically considered part of a firm's capital budget?

plants and/or buildings equipment

When you compare performance with the standard and only pay attention to the deviation, ______ has occurred.

principle of exception

An effective control system should accomplish which two goals?

produce the most possible benefits minimize behaviors that impede performance

The balance sheet and the ______ are financial statements that help control overall organizational performance.

profit and loss statement

For most companies, budgetary control begins with an estimate of ______ and expected income.

sales

Luvo is setting a ______ budget by reviewing forecasts of sales by month, sales area, and product.

sales

What type of budget includes data forecasting sales by month, sales area, and product?

sales

What is the first major step in the control process?

setting performance standards

A(n) ______ control system detects and corrects significant variations, or discrepancies, in the results of planned activities.

setting performance standards measuring performance taking action to correct problems comparing performance to the standard

Which are steps in the control process?

setting performance standards measuring performance taking action to correct problems comparing performance to the standard