ch 20 multiple choice
Accordning to the text, what are the two broad schemes by which controls can be classified
Area and level
79. The best way to integrate planning and control is to
develop controls as plans develop, set goals and standards for control during planning, link control with planning, make integration explicit and precise
86. Which of the following is NOT one of the characteristics of an effective control system?
developed and implemented by top management
83. 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
integrating planning with control
98. Participation in a control system
is a technique for overcoming resistance to controls
48. Deirdre is a freelance editor. She knows how many chapters she needs to edit and approximately how long each chapter takes. She is calculating what she needs to do to meet her next deadline. She is making a ____ budget.
labor
59. ____ ratios assess the ease with which the assets of the organization can be converted into cash.
liquidity
87. Which of the following statements is TRUE concerning what happens to control as the level of uncertainty increases?
measurements need to be taken more frequently
78. At the beginning of the planning-controlling process, planning
plays a major role in shaping the control process
35. Politicians transform information from many sources into decisions about policies for the area they govern. When politicians follow poll results after the passage of legislation, the politicians are using ____ control.
postaction
36. Amazon asks customers to rate their experience with the product and service. This is an example of ____ control.
postaction
37. The percentage of graduates who find a job within six months of graduation is a ____ control for colleges and universities.
postaction
24. eBay partnered with Nielsen Co. to poll users about ads on eBay. Nielsen then packaged the information for advertisers. This was a response to advertiser complaints about the effectiveness of ads on the Internet. Verifying ad effectiveness of other companies before buying ad space on eBay is a ____ control for the businesses.
preliminary
25. Thousands of people audition each year to be contestants on American Idol. The audition is an example of a ____ control.
preliminary
26. Everyone working or volunteering for Girl Scouts has a background check before they can work with girls or handle money. What kind of operations control is this?
preliminary
29. A 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?
preliminary
31. Politicians transform information from many sources into decisions about policies for the area they govern. When politicians "float an idea" by having a staff member leak it to the press to gauge reaction, the politician's staff is using ____ control.
preliminary
38. Postaction control is most appropriate when the
product being produced is simple and routine
43. Which of the following is NOT a type of operating budget?
production
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.
structural
screening controls
take place during the transformation process
Organizational control is
the regulation of organizational activities to facilitate goal attainment
The basic purpose of control is
to cope with organizational complexity, to adapt to environmental changes, to minimize costs, and to limit the accumulation of error
101. 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.
verification procedures
99. Some investment firms require traders to take two consecutive weeks of vacation, so the traders' books can be reviewed. This is an example of
verification procedures
Army helicopter pilots follow a preflight checklist because small things here and there can add up to disaster in the air later. This illustrates
why control is necessary to reduse to accumulation of errors
41. 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?
balance sheet
50. A(n) ____ is a financial statement that lists all of the organization's assets and liabilities at a given point in time.
balance sheet
58. Where would you expect to find the following information: "XYZ Corporation has $746 million in assets and $593 million in liabilities on October 1, 2012?"
balance sheet
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.
control standard
63. GE is highly leveraged. Financial analysts look at its ____ ratio to determine if it can make interest payments.
coverage
55. 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?
debt ratio
Income statements, balance sheets, and audits are examples of the control of
financial resources
27. To what part of a system are preliminary controls applied?
resources
The purpose of control is to
assess organizational performance relative to some desired goal
52. Which of the following would NOT be included in the typical balance sheet?
revenues
75. FedEx focuses on top line⎯quality and customer satisfaction. UPS focuses on bottom line⎯efficiency and cost. They have differences in ____ control.
strategic
76. 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.
strategic
Which of the following statements about financial audits is true?
They are independent appraisals, they may be internal or external to the org, they may be used to monitor accounting, financial, and operating systems within an org, they may be conducted on a continual or intermittent basis.
84. Which of the following is NOT a characteristic of effective controls?
accountability
85. One barrier to effective communication is the filtering of upward communication. Which characteristic of effective control systems would this affect?
accuracy
Cody Kretsinger was charged with a computer breach at Sony Pictures Entertainment. User data was stolen. Hackers now threaten companies of all sizes and require constant security updates. This example illustrates how a control system can be used to
adapt to the environmental change
A properly designed control system is important to an organization because it can be used to
anticipate, monitor and respond to changing circumstances
88. The term objective as it relates to controls means that the controls
are quantifiable
74. Which of the following is NOT one of the areas on which strategic control should focus?
audits
49. Which of the following statements does NOT describe a weakness associated with budgeting?
budgets link planning and controlling
67. ____ control is a form of organizational control characterized by formal and mechanistic structural arrangements.
bureaucratic
69. 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?
bureaucratic
14. 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.
controllers
54. A(n) ____ ratio is a measure of the firm's ability to meet its long-term financial obligations.
debt
62. 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?
debt ratios
70. World Vision has a flat structure that allows workers in countries scattered around the globe to respond to unique local cultures, situations, and needs. What control structure does World Vision use?
decentralized
72. ____ control is an approach to organizational control characterized by informal and organic structural arrangements.
decentralized
77. 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.
decentralized
16. The last step in the control process is to
determine the need for corrective action
22. 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
eliminate the control if things went as planned
15. Implementing the control process includes which of the following steps?
establish standards, determine the need for corrective action, compare performance against standards, measure performance
44. At the end of each fiscal year, managers report in their performance report if they are under budget. This is an example of a(n) ____control.
finance
61. 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?
financial ratios
82. Oshkosh Corp. hired hundreds of workers to meet an order deadline. The employee training process had to adapt. Which of the characteristics of an effective control system did the training system need?
flexibility
32. Which of the following is NOT a major form of operations control discussed in the text?
functional
66. The purpose of bureaucratic control is to
get employee compliance
Standards used in organizational control are most like
goals
Budgets
help managers coordinate resources, help define standards for control, provide guidelines about resources, enable the evaluation of the performance of managers
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
how control helps organizations respond to changing standards
93. Overcontrol is most problematic in areas dealing with ____ resources.
human
94. 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?
inappropriate focus
51. 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.
income statement
53. You are looking at a document that has entries for such items as revenues, expenses, and profit. You are looking at a(n)
income statement
57. The ____ shows an organization's bottom line (profit or loss) and summarizes activities over a period of time.
income statement
Cody Kretsinger was charged with a computer breach at Sony Pictures Entertainment. User data was stolen. Hackers now threaten companies of all sizes and require constant security updates. This is an example of the need for ____ control.
information
80. Managers can improve the effectiveness of the control system by
integrating control with planning
Internal audits tend to be
more specific than external audits
46. The ____ budgets are organizational budgets that outline quantities of product/service to be produced and what resources will be used.
nonmonetary
47. 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.
nonmonetary budget
89. What characteristic of effective control systems is lacking when a control system reports production output as being better than average, satisfactory, marginal, or unsatisfactory?
objectivity
90. 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
objectivity
56. If Suzlon Energy Ltd. wants to focus on the strength of its wind-turbine division, it will use ____ ratios.
operating
60. ____ ratios indicate the effectiveness of specific functional areas rather than that of the total organization.
operating
Google partnered with Nielsen Co. to poll users about ads on Google+. 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 Google is placing an emphasis on ____ controls.
operations
19. To the extent possible, standards used for control purposes should be derived from
organizational goals
McDonald's fast-food restaurants aim to fill each order within 90 seconds and to have no customer wait longer than 3.5 minutes. This is derived from the company's
organizational goals
91. Initially California Closets tried to limit employee access to Facebook. However, when Facebook became part of the company communication strategy, CC relented to employee Facebook access. Employees were happy because they thought the restriction was unreasonable. The employees perceived ____.
overcontrol
92. Some managers at J.P. Morgan Chase viewed the CEO monitoring all of their expenses as too much involvement. They saw it as
overcontrol
97. 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
overcontrol
39. Once a year Boy Scout troops submit financial reports describing income and expenditures. This is an example of ____ control.
postaction
42. Which of the following is NOT a type of financial budget?
profit
81. What is the MOST important factor in effectively integrating the planning and control functions?
provide for controls as plans are developed
21. After evaluation, an appropriate decision may be to
raise standards, do nothing, correct the deviation, lower standards (do any of these choices)
68. Which of the following is NOT characteristic of the bureaucratic approach to organizational control?
reliance on group norms
96. 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
resistance to control
45. 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.
revenue budget
71. Which of the following is NOT characteristic of decentralized control?
rewards focused on individual performance
28. During episodes of the Biggest Loser, contestants compete to lose weight and stay at the ranch, because someone leaves each week. This is an example of a ____ control.
screening
33. As the product being produced becomes more complex, which of the following types of operations controls would logically become more important?
screening
34. Politicians transform information from many sources into decisions about policies for the area they govern. When politicians follow poll results during legislative debate, the politicians are using ____ control.
screening
73. The level of control designed to ensure that the organization meets its goals is ____ control.
strategic
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 Accountability Office. The change in the economic and political environment of the Fed means the Fed needs to adapt its ____ control.
strategic
23. Apple iPhones are notorious for cracked screens. When a customer brings one in to an iStore, the employee checks the customer records and may replace the screen for free. Which step in the control process does this represent?
taking corrective action
