Ch 20 Bank

A(n) ____ is a financial statement that lists all of the organization's assets and liabilities at a given point in time. a. balance sheet b. revenue statement c. income statement d. financial plan e. capital expenditures budget

A

At the beginning of the planning-controlling process, planning a. plays a major role in shaping the control process. b. is temporarily unrelated to the control process. c. is shaped by the control system requirements. d. decreases organizational flexibility. e. increases the accuracy of organizational processes.

A

Booz Allen Hamilton requires employees to use a key that keeps track of how many copies they make on copy machines. Some employees resent the lack of trust. This is an example of a. overcontrol. b. verification procedures. c. resistance to control. d. reducing uncertainty. e. management by objectives.

A

If a manager has a participative style, works in a participative organization, and has subordinates who wish to participate, which control structure is most appropriate? a. Decentralized b. Organic c. System 4 d. Bureaucratic e. Laissez-faire

A

Marion Laboratories runs chemical analyses of materials to be used in the production process before those materials leave the receiving area of the warehouse. What kind of operations control is this? a. Preliminary b. Feedback c. Concurrent d. Screening e. Yes-no

A

On the end-of-year report for Yoplait yogurt, the division manager noted that "the gross margin for the product was lower than expected." This statement indicates that the control system used by Yoplait might lack a. objectivity. b. flexibility. c. accuracy. d. timeliness. e. integration with planning.

A

Screening controls a. take place during the transformation process. b. involve interviewing potential employees. c. are the same as preliminary control. d. determine organizational flexibility. e. determine accuracy of organizational standards.

A

Secretary of Defense, Gates, shifted the pentagon's budget from expensive, high tech weapon systems to timely, responsive systems. Small defense contractors were more responsive to the change and won more contracts. In this case ____ control helped the small companies. a. structural b. hierarchical c. strategic d. managerial e. operations

A

Stephanie makes hand-crafted jewelry. She knows the amount of inventory she brings to a show and how long it takes her to make each piece. She is calculating what she needs to do to get ready for her next show. She is making a ____ budget. a. labor b. production c. space d. balance sheet e. capital expenditure

A

The University of Michigan develops a budget that shows its projected income from sources such as the state of Michigan, tuition and fees, alumni contributions, and research grants. This is an example of a(n) ____ budget. a. revenue b. output c. capital expenditures d. balance sheet

A

The Wal-mart greeter, who offers customers a cart as they enter the store is part of the ____ control. a. preliminary b. screening c. postaction d. cybernetic e. feedback

A

The ____ shows an organization's bottom line (profit or loss) and summarizes activities over a period of time. a. income statement b. balance sheet c. internal audit d. operations budget e. pro forma statement

A

To what part of a system are preliminary controls applied? a. Resources b. Transformation processes c. Outputs d. Feedback elements e. Subsystems

A

What characteristic of effective control systems is lacking when a control system reports production output as being better than average, satisfactory, marginal, or unsatisfactory? a. Objectivity b. Flexibility c. Accuracy d. Timeliness e. Integration with planning

A

When classifying controls on the basis of the resources involved, we find that one class of resources is related to the control of all other resource classes as well. Which resource class overlaps all other classes? a. Financial b. Information c. Physical d. Human e. Technological

A

Which of the following is NOT a type of operating budget? a. Production b. Sales c. Expense d. Profit e. Revenue

A

Which of the following is NOT characteristic of decentralized control? a. Rewards focused on individual performance b. Employee commitment c. Widespread employee participation d. Informal and organic structural arrangements e. Employee self-control

A

Which of the following is NOT one of the characteristics of an effective control system? a. Developed and implemented by top management b. Flexibility c. Integrated with planning d. Developed with accurate input e. Timeliness

A

Which of the following statements is TRUE concerning what happens to control as the level of uncertainty increases? a. Measurements need to be taken more frequently. b. Controls can become less focused. c. Employees are less likely to resist controls. d. The control system becomes more objective. e. The importance of adequate controls decreases.

A

____ control is an approach to organizational control characterized by informal and organic structural arrangements. a. Decentralized b. Organic c. Mechanistic d. Bureaucratic e. Laissez-faire

A

____ ratios assess the ease with which the assets of the organization can be converted into cash. a. Liquidity b. Profitability c. Debt d. Operating e. Activity

A

A company that carefully evaluates its raw materials is using a ____ control. a. screening b. preliminary c. postaction d. cybernetic e. yes-no

B

A properly designed control system is important to an organization because it can be used to a. maximize costs. b. anticipate, monitor, and respond to changing circumstances. c. modify inappropriate organizational focus. d. modify organizational standards. e. reduce resistance to change.

B

A waitress who returns to check on you after you have tasted the food but before the bill is part of a ____ control. a. preliminary b. screening c. postaction d. cybernetic e. feedback

B

As the product being produced becomes more complex, which of the following types of operations controls would logically become more important? a. Preliminary b. Screening c. Postaction d. Preliminary e. Feedback

B

Deirdre has made out a financial budget that shows her personal income from all sources and how it will be spent, invested, and saved for the next year. This is an example of a(n) ____ budget. a. labor b. cash-flow or cash c. capital expenditure d. expense e. revenue

B

Facebook partnered with Nielsen Co. to poll users about ads on Facebook. Nielsen then packaged the information for advertisers. This was a response to advertiser complaints about the effectiveness of ads on the social network. Verifying ad effectiveness on Facebook is a ____ control for the advertisers. a. screening b. preliminary c. concurrent d. postaction e. feedback

B

General Plastics Corporation instituted a new absenteeism control policy that took effect the first day of June. It expects the new policy to result in a 25 percent reduction in absenteeism the first year. Like the previous policy, the new program counts vacation days as absenteeism. On the first of September, the personnel director evaluated the results of the program for the first three months and was disappointed to find that absenteeism had dropped only half of 1 percent. What is the likely problem? a. Employees are resisting control. b. The indicator of success was inappropriate. c. Control is inappropriately focused. d. The standard is not specific enough. e. A reduction of 25 percent is too much to hope for.

B

Internal audits tend to be a. more expensive than external audits. b. more specific than external audits. c. more political than external audits. d. more focused on efficiency. e. All of these choices

B

One barrier to effective communication is the filtering of upward communication. Which characteristic of effective control systems would this affect? a. Flexibility b. Accuracy c. Accountability d. Timeliness e. Objectivity

B

Organizational control is a. the regulation of management activities to increase leadership. b. the regulation of organizational activities to facilitate goal attainment. c. the system that monitors and manages via a self-regulating mechanism. d. a mechanism for maintaining the status quo. e. a device for determining where the organization should be at some future time.

B

Participation in a control system a. causes employees to resist control. b. is a technique for overcoming resistance to controls. c. is a criterion for making a control effective. d. is a step in the control process. e. is an action taken after evaluation control.

B

Secretary of Defense, Robert Gates, wanted more cheaper aircraft. Acquisition officers began using price as a ____ control before entering contracts negotiations. a. screening b. preliminary c. postaction d. cybernetic e. yes-no

B

Some investment firms require traders to take two consecutive weeks of vacation, so the traders books be reviewed. This is an example of a. management development. b. verification procedures. c. resistance to control. d. reducing uncertainty. e. management by objectives.

B

The college admissions board required students to have certain grade point averages and SAT scores to be accepted at the school. What form of operations control do these requirements represent? a. Screening b. Preliminary c. Postaction d. Cybernetic e. Yes-no

B

The last step in the control process is to a. establish standards. b. determine the need for corrective action. c. compare performance against standards. d. measure performance. e. maintain the status quo.

B

The purpose of control is to a. determine where the organization should be at some point in the future. b. assess organizational performance relative to some desired goal. c. determine how to structure the organization so as to carry out organizational plans. d. get the organization's employees to work toward organizational goals. e. verify that the organization's strategy is appropriate for its environment.

B

The term objective as it relates to controls means that the controls a. can be used to identify hidden costs. b. are quantifiable. c. are realistic. d. are focused on the right measures. e. provide information when needed.

B

To find the right host for a game show, a television production company/network will spend hours of time and manpower trying to find just the right personality who will be interesting enough for the typical audience without detracting from the actual game. This is an example of a ____ control. a. screening b. preliminary c. concurrent d. postaction e. feedback

B

What is wrong with a compensation system that rewards members of the sales force for the number of sales calls made without also looking at the average dollar sales per call? a. Lack of accountability b. Inappropriate focus c. Undercontrol d. Overcontrol e. Lack of standards

B

Where would you expect to find the following information: "XYZ Corporation has $46 million dollars worth of debt"? a. Income statement b. Balance sheet c. Internal audit d. Operations budget e. Pro forma statement

B

A plant manager is told that she has 8,000 labor hours to allocate in a week. This is an example of a(n) ____ budget. a. operations b. financial c. nonmonetary d. output e. expense

C

A(n) ____ is a financial statement that presents a picture of the organization's financial performance over a period of time as opposed to a single point in time. a. balance sheet b. operating budget c. income statement d. sales budget e. capital expenditures budget

C

According to the text, what are the two broad schemes by which controls can be classified? a. Level and cost b. Cost and focus c. Area and level d. Level and complexity e. Complexity and focus

C

American Greetings Corporation reported that "its sales have been hurt by people increasingly using the Internet to communicate" and by "lower-priced competition including Hallmark's Warm Wishes line of 99-cent cards." As a result, it decided to lay off 13 percent of its full-time workforce. This need for cost-cutting measures would have been detected by its ____ control system. a. operations b. organizational c. strategic d. functional e. environmental

C

Brokerage firms on Wall Street are now closely monitoring research analyst's e-mails. If the analysts view this as inappropriate, the control system will be characterized by a. overcontrol. b. no verification procedures. c. resistance to control. d. reducing uncertainty. e. management by objectives.

C

If Suzlon Energy Ltd. wants to focus on the strength of its wind-turbine division, it will use ____ ratios. a. coverage b. debt c. operating d. return e. activity

C

John Hamann began his company making herb vinegars from a recipe his grandmother had given him. As demand grew, he had to buy a large commercial kitchen. Which of the following ratios would a banker have been most interested in before allowing Hamann to borrow $500,000? a. Liquidity ratios b. Profitability ratios c. Debt ratios d. Operating ratios e. Activity ratios

C

Lands' End prides itself on quality control. If a garment is not the right color or the stitching has flaws, Lands' End sells it at a reduced price in the Not-Quite-Perfect section of its website. This is an example of a ____ control. a. preliminary b. screening c. postaction d. cybernetic e. feedback

C

Marmot Mountain produces high-quality outerwear and sleeping bags. When distribution problems arose, it talked to its retailers to learn how its performance could equal the standards the retailers wanted. Getting feedback from retailers who sell its products is an example of ____ control. a. preliminary b. screening c. postaction d. cybernetic e. feedback

C

Overcontrol is most problematic in areas dealing with ____ resources. a. financial b. physical c. human d. information e. international

C

Postaction control is most appropriate when the a. time between goal setting and attainment is short. b. product being produced is nonperishable. c. product being produced is simple and routine. d. production process is very complicated. e. volume of product output is extremely large.

C

Some managers at J.P. Morgan Chase viewed the CEO monitoring all of their expenses as too much involvement. They saw it as a. extreme objectivity. b. inappropriate focus. c. overcontrol. d. excessive accountability.

C

Standards used in organizational control are most like a. policies. b. strategies. c. goals. d. rules. e. standing plans.

C

The credit crisis and the Federal Reserve's response to it faced criticism from Congress. The Treasury Department requested a review of the central bank's structure and governance. There is now broad support for auditing the Fed using the Government Accounting Office. The change in the economic and political environment of the Fed means the Fed needs to adapt its ____ control. a. structural b. hierarchical c. strategic d. managerial e. operations

C

The credit crisis and the Federal Reserve's response to it faced criticism from Congress. The Treasury Department requested a review of the central bank's structure and governance. There is now broad support for auditing the Fed using the Government Accounting Office. This example illustrates how a control system can be used to a. minimize costs. b. limit the accumulation of errors. c. adapt to the environmental change. d. cope with wide spans of management. e. All of these choices

C

The local, state, and federal response to hurricane Katrina highlighted problems at each level. In the end, more than 1,000 people died. This illustrates a. organizational complexity. b. how changing conditions are influenced by innovation. c. why control is necessary to reduce the accumulation of errors. d. how control helps organizations respond to changing standards. e. how organizations cope with multiple control standards.

C

The purpose of bureaucratic control is to a. enhance employee participation in the control function. b. produce performance above minimum acceptable standards. c. get employee compliance. d. increase group performance. e. increase employee self-control.

C

What is the problem with a university reward system that encourages faculty members to publish numerous research articles but fails to consider the quality of the articles? a. Overcontrol b. Rewarding inefficiency c. Inappropriate focus d. No accountability e. Too restrictive

C

What kind of control is a year-end sales report? a. Preliminary b. Screening c. Postaction d. Cybernetic e. Feedback

C

When Boeing bought the aviation parts and services company Aviall, it stated that it expected to have no initial change in earnings and the following year a modest gain. It was a. attempting to control its external environment. b. attempting to be timely with its controls. c. integrating planning with control. d. relying on bureaucratic controls. e. None of these choices

C

When Secretary of Defense, Robert Gates, shifted defense acquisitions to cheaper weapon systems, the large defense contractors like Boeing and Lockheed had to shift their ____ control systems. a. operations b. organizational c. strategic d. functional e. environmental

C

Which of the following is NOT a characteristic of effective controls? a. Flexibility b. Accuracy c. Accountability d. Timeliness e. Objectivity

C

Which of the following is NOT one of the areas on which strategic control should focus? a. Structure b. Leadership c. Competitive advantage d. Human resources e. Technology

C

Which of the following statements does NOT describe a weakness associated with budgeting? a. Some managers apply budgets too rigidly. b. Developing budgets can be very time consuming. c. Budgets link planning and controlling. d. Budgets may limit innovation and change. e. Budgets may make it impossible to procure funds to take advantage of an unexpected opportunity.

C

You are a banker reviewing a loan application from a local business. Which of the following ratios would you look at to get a quick measure of the business's ability to meet its long-term financial obligations? a. Liquidity ratio b. Return on assets c. Debt ratio d. Current ratio e. Activity ratio

C

Your management information system provides managers with weekly data concerning deviations from standards in each department. Which step in the control process does this represent? a. Taking corrective action b. Measuring performance c. Comparing performance to standards d. Establishing performance standards e. Setting goals

C

____ ratios indicate the effectiveness of specific functional areas rather than that of the total organization. a. Coverage b. Debt c. Operating d. Return e. Activity

C

Anu is comparing the performance of her small landscaping business against the standards she established. When she has finished her comparisons, any of the following actions may be appropriate EXCEPT a. correct deviations as required. b. maintain the status quo. c. increase the control standards. d. eliminate the control if things went as planned. e. decrease the control standards.

D

Businesses that use H-form or M-form organizational design may have several ____ who are responsible for helping line managers with their control functions, for coordinating the organization's overall control system, and for gathering and assimilating relevant information. a. ombudsmen b. facilitators c. change agents d. controllers e. control champions

D

If a manager has a directive leadership style and works in an organization in which performance expectations are minimal, which control structure is most appropriate? a. Decentralized b. Organic c. System 4 d. Bureaucratic e. Laissez-faire

D

Managers can improve the effectiveness of the control system by a. changing the performance standards. b. controlling as many things in the organization as possible. c. computerizing the system. d. integrating control with planning. e. correcting all deviations from standards.

D

The Sarbanes-Oxley Act, passed after the fall of Enron and Arthur Andersen, requires accounting firms to separate the auditing function from the consulting function. This example illustrates a. organizational complexity. b. how changing conditions are influenced by innovation. c. why control is necessary to reduce the accumulation of errors. d. how control helps organizations respond to changing standards. e. All of these choices

D

The control standard at McDonald's fast-food restaurants is to fill each order within 90 seconds and to have no customer wait longer than 3.5 minutes. As with most control standards, these are derived from the company's a. historical data. b. time-series data. c. external data. d. organizational goals. e. production indices.

D

The level of control designed to ensure that the organization meets its goals is ____ control. a. operations b. organizational c. functional d. strategic e. administrative

D

To the extent possible, standards used for control purposes should be derived from a. historical data. b. time-series data. c. external data. d. organizational goals. e. production indices.

D

Which of the following is NOT a major form of operations control discussed in the text? a. Preliminary b. Screening c. Postaction d. Functional e. None of these choices

D

Which of the following is a type of financial budget that deals with forecasting the organization's assets and liabilities in the event all other budgets are met? a. Cash-flow b. Liquidity c. Capital expenditure d. Balance sheet e. Pro forma

D

Which of the following would NOT be included in the typical balance sheet? a. Current assets b. Fixed assets c. Stockholder's equity d. Revenues e. Long-term liabilities

D

You are looking at a document that has entries for such items as revenues, expenses, and profit. You are looking at a(n) a. balance sheet. b. revenue budget. c. capital expenditure budget. d. income statement. e. master budget.

D

____ control is a form of organizational control characterized by formal and mechanistic structural arrangements. a. Decentralized b. Divisional c. Chain of command d. Bureaucratic e. Administrative

D

A production manager argues that the increase in absenteeism is caused by decreased recruiting and placement standards. The argument is supported by personnel documents. This is an example of a. overcoming resistance to control. b. overcontrol. c. objectivity. d. participation. e. checks and balances.

E

A(n) ____ ratio is a measure of the firm's ability to meet its long-term financial obligations. a. liquidity b. income c. activity d. operating e. debt

E

After evaluation, an appropriate decision may be to a. raise standards. b. do nothing. c. correct the deviation. d. lower standards. e. Do any of these choices

E

Budgets a. help managers coordinate resources. b. help define standards for control. c. provide guidelines about resources. d. enable the evaluation of the performance of managers. e. All of these choices

E

Facebook partnered with Nielsen Co. to poll users about ads on Facebook. Nielsen then packaged the information for advertisers. This was a response to advertiser complaints about the effectiveness of ads on the social network. This indicates that Facebook is placing an emphasis on ____ controls. a. structural b. hierarchical c. strategic d. managerial e. operations

E

GE is highly leveraged. Financial analysts look at its ____ ratio to determine if it can make interest payments. a. liquidity b. leverage c. activity d. operating e. coverage

E

Implementing the control process includes which of the following steps? a. Establish standards b. Determine the need for corrective action c. Compare performance against standards d. Measure performance e. All of these choices

E

Income statements, balance sheets, and audits are examples of the control of a. physical resources. b. cybernetics. c. human resources. d. organizational complexity. e. financial resources.

E

MTV has a(n) ____ perspective toward international strategic control. It does not require its various divisions (MTV Europe, MTV Australia, MTV India, MTV Latin America, and so on) to report in frequently. It believes in letting each manager have the authority to respond quickly to environmental changes. These changes do not have to be approved by MTV before they are implemented. a. administrative b. mechanistic c. centralized d. bureaucratic e. decentralized

E

Merrill Lynch monitored a research analyst's e-mails, discovered illegal information sent to a client, and fired the analyst. Merrill Lynch's ____ helped reduce resistance to control. a. participation b. flexibility c. appropriate focus d. high standards e. verification procedures

E

The ____ at McDonald's fast-food restaurants is to fill each order within 90 seconds and to have no customer wait longer than 3.5 minutes. a. structural goal b. physical resource control c. financial control d. corrective strategy e. control standard

E

The ____ budgets are organizational budgets that outline quantities of product/service to be produced and what resources will be used. a. operating b. capital expenditure c. revenue d. cash-flow e. nonmonetary

E

The basic purpose of control is a. to cope with organizational complexity. b. to adapt to environmental changes. c. to minimize costs. d. to limit the accumulation of error. e. All of these choices

E

The best way to integrate planning and control is to a. develop controls as plans develop. b. set goals and standards for control during planning. c. link control with planning. d. make integration explicit and precise. e. All of these choices

E

What is the MOST important factor in effectively integrating the planning and control functions? a. Set clear objectives b. Develop a strategy that eliminates the need for controls c. Compare past performance to standards d. Ensure that the system is flexible e. Provide for controls as plans are developed

E

Which of the following is NOT a type of financial budget? a. Cash-flow b. Capital expenditure c. Balance sheet d. Cash e. Profit

E

Which of the following is NOT characteristic of the bureaucratic approach to organizational control? a. Rewards focused on individual performance b. Tall organizational structure c. Limited employee participation d. Reliance on rules and a rigid hierarchy e. Reliance on group norms

E

Which of the following is an example of a financial control that allows managers to compare different elements of a balance sheet and income statement to one another? a. Balance sheet b. Income statement c. External audit d. Return on assets computation e. Financial ratios

E

Which of the following statements about financial audits is TRUE? a. They are independent appraisals. b. They may be internal or external to the organization. c. They may be used to monitor accounting, financial, and operating systems within an organization. d. They may be conducted on a continual or an intermittent basis. e. All of these choices

E

An after-action report is a screening control.

F

An operating budget is a budget that determines the number of units to be produced during the coming time period.

F

As the number of things being controlled by the organization increases, the likelihood that employees will resist those controls tends to decrease.

F

Bureaucratic control focuses on enhanced performance that exceeds minimum acceptable standards.

F

Bureaucratic control is outdated and not effective any more

F

Internal audits are not as effective as external audits.

F

One purpose of control is to simplify organizations.

F

Reporters who verify stories with additional sources are using screening control.

F

Return ratios are measures of an organization's ability to convert assets into cash quickly.

F

Some auditors specialize in legal bills, pension plans, or benefit plans.

F

Strategic control in global organizations is the same as domestic organizations.

F

The CEO is responsible for developing the budget and communicating it to managers.

F

The last step in the control process is to change the standard.

F

The listing of an organization's assets and liabilities at a particular point in time can usually be found in its cash flow budget.

F

The responsibility for managing control rests on the CEO.

F

A properly designed control system can help management anticipate, monitor, and respond to changing circumstances.

T

After a comparison of performance to standards, one action that may be appropriate is to do nothing.

T

An effective way to promote employee participation in the control process is to use screening controls.

T

As much as possible, standards established for control purposes should reflect the goals of the organization.

T

Decentralized control relies heavily on self-control by the organization's employees.

T

Effective control helps managers decide where they want their business to go, point it I that direction, and monitor results to keep it on track.

T

Financial resource controls are interrelated with the control of all other organizational resources.

T

If objective data are available, they will provide more useful information than will mere subjective impressions.

T

Information systems are an essential element of strategic control.

T

Internal audits examine the efficiency and appropriateness of financial and accounting procedures

T

Managers make a surprisingly large number of decisions based on inaccurate information.

T

Operations controls monitor input, transformation, and output.

T

Strategic controls are concerned with how well the organization aligns itself with the environment.

T

The most common controls are screening controls.

T

The planning and controlling functions are interrelated.

T

Toyota is designing a new car. At the same time it is planning the recycling abilities of the parts. Toyota is effectively integrating planning and control processes.

T