Deck 1: Financial Planning and Management

Question 1

The four functions of management are planning, organizing, leading, and controlling. Which function does not require financial competence?

A) Planning
B) Organizing
C) Leading
D) Controlling
E) All four functions require financial competence

Answer 1

E

Question 2

Budgeting competency requires the ability to

A) Define the production system
B) Quantify expected operations in dollars
C) Analyze actual results in light of the budget to determine where costs were better or worse than expected
D) All of the above

Answer 2

D

Question 3

Managers are generally the most knowledgeable about which aspect of budgeting?

A) Defining the production system, i.e., how goods and services are produced
B) Quantifying expected operations in dollars, i.e., building a budget
C) Analyzing potential capital investments to determine whether they are financially advantageous
D) Analyzing actual results in light of the budget to determine where costs were better or worse than expected

Answer 3

A

Question 4

The objective of the prospective phase of the budgeting process is to

A) Estimate revenue and expenses for the upcoming fiscal year or quantify the amount of resources that should be consumed
B) Estimate revenue and expenses for the upcoming fiscal year or control resources as they are consumed
C) Facilitate and control processes or control resources as they are consumed
D) Facilitate and control processes or examine the resources that were consumed
E) Evaluate processes or examine the resources that were consumed

Question 5

The objective of the concurrent phase of the budgeting process is to

A) Estimate revenue and expenses for the upcoming fiscal year or quantify the amount of resources that should be consumed
B) Estimate revenue and expenses for the upcoming fiscal year or control resources as they are consumed
C) Facilitate and control processes or control resources as they are consumed
D) Facilitate and control processes or examine the resources that were consumed
E) Evaluate processes or examine the resources that were consumed

Question 6

Evaluating the resources consumed and the performance of management is the objective of the

A) Prospective phase of budgeting
B) Concurrent phase of budgeting
C) Retrospective phase of budgeting
D) All phases of budgeting

Question 7

Which of the following groups are primarily tasked with focusing on the work of departments and ensuring their effectiveness?

A) Senior management
B) Finance
C) Operating managers
D) Planning
E) Marketing

Question 8

The role of senior management is to

A) Provide vision and set organizational goals
B) Determine organizational constraints and highlight trade-offs
C) Ensure the effectiveness and efficiency of production processes
D) All of the above

Question 9

The three economic questions are

A) What to produce, how to produce, and who receives output?
B) What to produce, how to produce, and who receives profit?
C) What to produce, how much to charge, and who receives profit?
D) What to produce, how much to produce, and how much to charge?

Question 10

Which of the following activities does NOT occur during the budget estimation process?

A) Forecasting quantity of output
B) Estimating total revenue
C) Estimating total expense
D) Evaluating the feasibility of the budget
E) Identifying accountability when actual revenues or expenses fall short of budget targets

Question 11

Which of the following activities does NOT occur during the budget facilitation and control process phase?

A) Communicating organization goals and resource constraints
B) Continuous monitoring of performance
C) Initiating corrective action when budget targets are not realized
D) Establishing accountability when actual revenues or expenses fall short of budget targets

Question 12

The part of a system where resources enter the production system is

A) Input
B) Throughput
C) Output
D) Outcome

Question 13

The two parts of a system that managers have the greatest control over are

A) Inputs and throughputs
B) Inputs and outputs (in a non-healthcare industry where inputs can be screened and rejected, patients cannot be turned away)
C) Throughputs and outputs
D) Outputs and outcomes
E) Throughputs and outcomes

Question 14

During the throughput process

A) Inputs are transformed into outputs
B) Inputs enter into the production processes
C) Goods and services are produced
D) Results are realized
E) Deviations from expected or desired results are recognized and communicated to other parts of the system

Question 15

The best budget to use if managers want to control throughputs is

A) An incremental budget
B) A flexible budget
C) A zero-base budget
D) A program budget
E) An activity-based budget

Question 16

Activity-based budgets are best if managers want to focus attention and control on

A) Inputs
B) Throughputs
C) Outputs
D) Outcomes
E) Feedback

Question 17

The primary focus of a flexible budget is

A) Input use
B) Control of production processes
C) Efficiency
D) Effectiveness

Question 18

According to the balanced scorecard perspective, the primary objective of an organization is to

A) Maximize the value of the organization, i.e., earn a sufficient profit
B) Maximize customer satisfaction
C) Maximize the effectiveness and efficiency of internal processes
D) Maximize the learning and growth of employees by providing access to information and tools
E) All of the above

Question 19

Which part of the balanced scorecard is focused on maximizing the effectiveness and efficiency of internal processes?

A) The financial perspective
B) The customer perspective
C) The internal perspective
D) The learning and growth perspective

Question 20

In the balanced scorecard, what is the foundation from which all the other parts of the balanced scorecard are built?

A) The financial perspective
B) The customer perspective
C) The internal perspective
D) The learning and growth perspective

Question 21

Maximizing the value of the organization should be the objective for

A) For-profits
B) Non-profits
C) Public agencies
D) All organizations

Question 22

Financial skills are only needed by personnel working in accounting, finance, and senior management.

Question 23

The primary purpose of a budget is to provide estimates of future revenues and expenses.

Question 24

The primary purpose of a budget is to provide an operating plan to facilitate management.

Question 25

In the long run, organizations must be effective and efficient to survive.

Question 26

The role of management and the budget is to maximize the value of the organization.