Question 1

Mistletoe Corporation has a detailed set of organizational goals and management information system that delivers timely and accurate information. Mistletoe still has control problems, however, because its managers refuse to act on the information they receive. Mistletoe's control process has flaws in which of the following areas?
A) Its performance standards
B) Its management information systems
C) Its ability to take corrective action when necessary
D) Its measurement systems
E) None of these

Accepted Answer

The control process involves setting performance standards, measuring performance against those standards, comparing actual performance to the standards, and taking corrective action when necessary. In this case, Mistletoe has a detailed set of organizational goals and a management information system that delivers timely and accurate information, indicating that its performance standards and management information systems are not flawed. The problem lies in the managers' refusal to act on the information they receive, indicating a flaw in the ability to take corrective action when necessary.

Question 2

Brad is a department manager at Home Theater, Inc. His sole role in the budget process is to implement the budget that is developed for him. This is an example of
A) strategic budgeting.
B) operational budgeting.
C) top-down budgeting.
D) management by objectives.
E) bottom-up budgeting.

Accepted Answer

Brad's role, where the budget is developed for him and his responsibility is solely to implement it, is an example of top-down budgeting. In top-down budgeting, decisions and the budget itself are formulated at the top level of the organization and then passed down through the hierarchy for implementation.

Question 3

Kyle's work group consistently exceeds the goals the members set for themselves some months ago. In an attempt to better motivate the group, Kyle thought it would be a good idea to set new goals. This is an example of Kyle exercising control by
A) comparing performance to standards.
B) developing adequate measures of performance.
C) taking corrective action.
D) all of these
E) comparing performance to standards and developing adequate measures of performance only.

Accepted Answer

The answer of Kyle's work group consistently exceeds the goals...

Question 4

Which of these is a financial budget that estimates cash flows on a daily basis or weekly basis to ensure that the company can meet its obligations?
A) Capital expenditure budget
B) Balance sheet budget
C) Cash budget
D) Revenue budget
E) Profit budget

Accepted Answer

A cash budget estimates the cash flows on a daily or weekly basis to ensure that the company has enough cash available to meet its current obligations. It helps the company to manage its cash effectively and avoid any possible liquidity problems. The other budget options listed are: A) Capital expenditure budget which estimates the funds needed for long-term investment plans, B) Balance sheet budget which estimates the company's assets, liabilities, and equity at a specific time, D) Revenue budget which estimates the company's revenue for a specific period, and E) Profit budget which estimates the company's net income for a specific period.

Question 5

The firm's financial position with respect to assets and liabilities at a specific point in time is shown by its
A) activity ratio.
B) profitability ratio.
C) income statement.
D) liquidity ratio.
E) balance sheet.

Accepted Answer

The balance sheet is a financial statement that shows the firm's financial position at a specific point in time, including its assets, liabilities, and equity. This statement provides a snapshot of the firm's financial health and is used to assess its ability to meet its financial obligations and manage its resources effectively. The other options (activity ratio, profitability ratio, income statement, and liquidity ratio) are all financial ratios or statements that provide different types of information about the firm's financial performance but do not show its financial position at a specific point in time.

Question 6

The conversion ratio is considered to be a(n)
A) activity ratio.
B) liquidity ratio.
C) profitability ratio.
D) leverage ratio.
E) cash ratio.

Accepted Answer

The conversion ratio is a type of activity ratio that measures the number of convertible securities that can be exchanged for common stock. It is used to determine the potential dilution of earnings per share for companies that have issued convertible securities.

Question 7

Your department has absenteeism standards, a way to measure absenteeism, and, based on your investigation, you have concluded that your department has an excessive absenteeism rate. What should your next step be?
A) Set new absenteeism standards
B) Develop new measures of absenteeism
C) Terminate three employees for excessive absenteeism
D) All of these would be good examples of taking corrective action.
E) None of these

Accepted Answer

Setting new absenteeism standards may not address the root cause of the excessive absenteeism rate. Developing new measures of absenteeism may not be necessary if the current measures are reliable. Terminating employees should only be done after proper documentation and counseling to address the cause of their excessive absenteeism. Taking corrective action should involve a combination of addressing the cause of absenteeism (e.g. improving work conditions or offering flexible work arrangements) and setting expectations and consequences for employees who exceed the absenteeism standards.

Question 8

The ____ is purchase orders divided by customer inquiries.
A) current ratio
B) inventory turnover ratio
C) conversion ratio
D) profit margin on sales
E) none of these

Accepted Answer

The given formula is used to calculate the conversion ratio, which measures the number of purchase orders generated against the customer inquiries. Inventory turnover ratio calculates the number of times inventory is sold and replaced in a given period. Current ratio measures a company's ability to meet its short-term obligations. Profit margin on sales measures the profitability of a company by calculating the percentage of profit earned on sales. None of these ratios are relevant to the given formula.

Question 9

An advantage of the bottom-up budgeting process is
A) its emphasis on bureaucratic control.
B) lower managers are more involved.
C) top managers control the information flow.
D) top managers are often not committed to achieving budget targets.
E) all of these.

Accepted Answer

The advantage of the bottom-up budgeting process is that it involves lower-level managers to a greater extent, allowing for more input and participation from those who have a better understanding of the day-to-day operations of the organization. This can lead to more accurate and achievable budget targets. The other options listed are not advantages of the bottom-up process.

Question 10

The ____ plans future investments in major assets to be depreciated over several years.
A) capital budget
B) balance sheet budget
C) cash budget
D) revenue budget
E) profit budget

Accepted Answer

The capital budget plans future investments in major assets that will be depreciated over several years. The balance sheet budget plans the company's assets, liabilities, and equity at a specific point in time. The cash budget plans the company's cash inflows and outflows, while the revenue budget plans expected revenue and sales for a certain period. The profit budget plans expected expenses and profits for a certain period.

Question 11

____ provide the basic information used for financial control of an organization.
A) Owners equity
B) Income statements
C) Financial position
D) Mission Statements
E) 100-K's

Accepted Answer

Income statements provide information about an organization's revenues, expenses, and profits or losses over a specific period of time. This information is used for financial control and decision making. Owners equity and financial position also provide important financial information, but income statements are specifically designed to track financial performance over time. Mission statements and 100-K's are not directly related to financial control.

Question 12

The ____ ratio refers to the ability of the organization to meet its current debt obligation.
A) activity
B) liquidity
C) profitability
D) conversion
E) growth

Accepted Answer

The liquidity ratio measures the ability of the organization to meet its current financial obligations. It determines whether the company has enough short-term assets to cover its short-term debt.

Question 13

____ is(are) the difference between assets and liabilities and is the company's net worth in stock and retained earnings.
A) Assets
B) Current debt
C) Net profit
D) Owners' equity
E) Liabilities

Accepted Answer

Owners' equity is the difference between a company's assets and liabilities, which represents the net worth of the company. This includes stock issued, as well as the accumulated earnings that haven't been paid out in dividends.

Question 14

Decentralized control is most consistent with which of the following budget processes?
A) Bottom-up budgeting
B) Top-down budgeting
C) Strategic budgeting
D) Cost budgeting
E) None of these

Accepted Answer

Decentralized control involves giving decision-making power to lower-level employees or departments within an organization. Bottom-up budgeting involves gathering input from these lower-level employees or departments in order to create a budget. This process is consistent with decentralized control as it empowers these individuals to have a say in the budgeting process. Top-down budgeting, on the other hand, involves creating a budget at the highest levels of an organization and imposing it on lower-level units. Strategic budgeting involves creating a budget that aligns with an organization's strategic goals, while cost budgeting focuses on managing and minimizing costs. Neither of these processes necessarily aligns with decentralized control.

Question 15

Managers must rely on quantitative measures and ____ in order to exert effective control, in most organizations.
A) numerical indicators
B) profits
C) their own judgment
D) goal achievement
E) employees' words

Accepted Answer

The answer of Managers must rely on quantitative measures and...

Question 16

Pauline is an area manager at Ironman Gym. She anticipates her area's needs and formulates a proposed budget every quarter. She then sends this proposal to her manager. This is an example of
A) top-down budgeting.
B) strategic budgeting.
C) revenue budgeting.
D) bottom-up budgeting.
E) none of these.

Accepted Answer

The answer of Pauline is an area manager at Ironman...

Question 17

Which of the following includes anticipated and actual expenses for a responsibility center?
A) revenue budget
B) cash budget
C) capital budget
D) expense budget
E) operating budget

Accepted Answer

An expense budget includes anticipated and actual expenses for a responsibility center. A revenue budget focuses on anticipated revenues, a cash budget focuses on anticipated cash inflows and outflows, a capital budget focuses on anticipated investments in long-term assets, and an operating budget includes both revenues and expenses for a center.

Question 18

Which of the following is a ratio that measures the firm's internal performance with respect to key activities defined by management?
A) A liquidity ratio
B) An activity ratio
C) Return on total assets
D) A current ratio
E) Profit margin on sales

Accepted Answer

An activity ratio measures a firm's internal performance with respect to key activities defined by management. Liquidity ratios (A) measure a firm's ability to meet short-term obligations, return on total assets (C) measures the profitability of assets, current ratio (D) measures a firm's ability to pay current liabilities with current assets, and profit margin on sales (E) measures the percentage of each sale that results in profit.

Question 19

Madison has been assigned to work on the development of a budget that plans future investments in major assets such as buildings and heavy machinery. Madison is working on a(n)
A) cash budget.
B) capital budget.
C) revenue budget.
D) operating budget.
E) expense budget.

Accepted Answer

Madison is working on a capital budget, which plans for long-term investments in major assets such as buildings and heavy machinery. A cash budget plans for the inflow and outflow of cash, a revenue budget plans for expected income, an operating budget plans for day-to-day expenses, and an expense budget plans for specific expenses. None of these accurately describe the task Madison has been assigned.

Question 20

____ is any organizational department or unit under the supervision of a single person who is responsible for its activity.
A) Independent center
B) Responsibility center
C) Analysis center
D) Control center
E) Budgeting center

Accepted Answer

A responsibility center is a unit or department in an organization that is under the supervision of a single person who is responsible for its activity. It is often associated with a specific function or goal and is held accountable for achieving its objectives. Examples of responsibility centers include profit centers, cost centers, and investment centers.

Quiz 18: Managing Quality and Performance

Brad is a department manager at Home Theater, Inc. His sole role in the budget process is to implement the budget that is developed for him. This is an example of

Kyle's work group consistently exceeds the goals the members set for themselves some months ago. In an attempt to better motivate the group, Kyle thought it would be a good idea to set new goals. This is an example of Kyle exercising control by

Which of these is a financial budget that estimates cash flows on a daily basis or weekly basis to ensure that the company can meet its obligations?

The firm's financial position with respect to assets and liabilities at a specific point in time is shown by its

The conversion ratio is considered to be a(n)

Your department has absenteeism standards, a way to measure absenteeism, and, based on your investigation, you have concluded that your department has an excessive absenteeism rate. What should your next step be?

The ____ is purchase orders divided by customer inquiries.

An advantage of the bottom-up budgeting process is

The ____ plans future investments in major assets to be depreciated over several years.

____ provide the basic information used for financial control of an organization.

The ____ ratio refers to the ability of the organization to meet its current debt obligation.

____ is(are) the difference between assets and liabilities and is the company's net worth in stock and retained earnings.

Decentralized control is most consistent with which of the following budget processes?

Managers must rely on quantitative measures and ____ in order to exert effective control, in most organizations.

Pauline is an area manager at Ironman Gym. She anticipates her area's needs and formulates a proposed budget every quarter. She then sends this proposal to her manager. This is an example of

Which of the following includes anticipated and actual expenses for a responsibility center?

Which of the following is a ratio that measures the firm's internal performance with respect to key activities defined by management?

Madison has been assigned to work on the development of a budget that plans future investments in major assets such as buildings and heavy machinery. Madison is working on a(n)

____ is any organizational department or unit under the supervision of a single person who is responsible for its activity.