Question 1

The financial ratio that indicates the degree to which the organization uses debt or equity to finance its ongoing operations is the ________ ratio.
A)leverage
B)liquidity
C)activity
D)profit

Accepted Answer

The leverage ratio measures the extent to which a company is using borrowed money (debt) versus shareholders' equity to finance its operations.

Question 2

When a manager is told to maximize the revenues from the sales of goods and services produced, this is an example of a(n)________ budget approach.
A)quality
B)revenue
C)operational
D)fixed

Accepted Answer

Maximizing revenues from sales is directly related to a revenue budget approach, which focuses on increasing income from sales activities.

Question 3

Calculate the return on investment from the information given below. Net Income = $18,000; Advertising Expenses = $220,000; Total Liabilities = $120,000; Total Assets = $160,000; Gross Margin = $80,000; Taxes Paid = $2,000
A)16.67 percent
B)15 percent
C)11.25 percent
D)12.5 percent

Accepted Answer

Return on Investment (ROI) is calculated as (Net Income / Total Assets) * 100. Here, ROI = ($18,000 / $160,000) * 100 = 11.25 percent.

Question 4

The manager of a profit center is evaluated on the basis of the amount of sales that have been generated from the goods or services produced in his/her division. The divisional manager is being evaluated using the ________ budget approach.
A)expense
B)cash flow
C)revenue
D)profit

Accepted Answer

The manager is evaluated based on sales generated, which aligns with a revenue budget approach.

Question 5

Rules and SOPs are used to regulate the behavior of workers within the organization with a ________ control system.
A)bureaucratic
B)feedback
C)feedforward
D)concurrent

Accepted Answer

Bureaucratic control systems use rules and standard operating procedures (SOPs) to regulate the behavior of workers within an organization.

Question 6

The financial ratio that measures how well the managers of the organization are creating value from the organization's assets is the ________ ratio.
A)leverage
B)liquidity
C)current
D)activity

Accepted Answer

The activity ratio measures how efficiently a company utilizes its assets to generate revenue, indicating how well managers are creating value from the organization's assets.

Question 7

The most immediate and potent form of behavior control is
A)direct supervision.
B)clan control.
C)bureaucratic control.
D)socialization.

Accepted Answer

Direct supervision involves real-time oversight and immediate feedback, making it the most immediate and potent form of behavior control.

Question 8

A mechanism of control utilized in organizational culture is
A)direct supervision.
B)management by objectives.
C)socialization.
D)organizational goals.

Accepted Answer

Socialization is a mechanism of control in organizational culture as it involves integrating new employees into the organization's culture, aligning their values and behaviors with those of the organization.

Question 9

From the information given below, calculate the organization's return on investment. Total Liabilities = $300,000; Total Assets = $600,000; Gross Margin = $200,000; Net Income before Taxes = $30,000; Total Expenses = $240,000
A)50 percent
B)5 percent
C)10 percent
D)12.5 percent

Accepted Answer

The answer of From the information given below, calculate the...

Question 10

With management by objectives, the first things established are
A)evaluations.
B)organizational objectives.
C)management goals.
D)subordinate goals.

Accepted Answer

Organizational objectives are the first things established in management by objectives. This is because the entire process of management by objectives is based on the idea of setting clear and measurable objectives for the organization as a whole. Once these objectives have been established, they can be used to develop management goals and subordinate goals.

Question 11

When a divisional manager is evaluated based on the operating income of his division, this is an example of a(n)________ budget approach.
A)capital
B)revenue
C)expense
D)profit

Accepted Answer

This is a profit budget approach because the evaluation is based on the operating income, which is a measure of profit.

Question 12

Rules and SOPs are of little use in telling a scientist how to discover something new. Thus, which of the following forms of control should not be applied to scientists?
A)feedforward
B)feedback
C)bureaucratic
D)concurrent

Accepted Answer

Bureaucratic control, which relies on rules and procedures, is not suitable for guiding scientists in the discovery process, as scientific discovery often requires creativity and flexibility beyond rigid guidelines.

Question 13

The financial ratio that indicates whether or not the organization is capable of paying off its short-term debts without having to sell its inventory is the ________ ratio.
A)quick
B)current
C)days sales outstanding
D)profit

Accepted Answer

The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory.

Question 14

The financial ratio that indicates how efficiently the managers of the organization are collecting the revenue due to the organization from the sale of its products or services is the ________ ratio.
A)debt-to-assets
B)quick
C)current
D)days sales outstanding

Accepted Answer

The days sales outstanding (DSO) ratio measures how efficiently a company collects revenue from its customers, indicating the average number of days it takes to collect payment after a sale.

Question 15

Calculate the current ratio of the organization from the information given below. Sales = $200,000; Gross Profit = $40,000; Total Assets = $450,000; Current Assets = $250,000; Current Liabilities = $300,000
A)0.44
B)0.56
C)0.67
D)0.83

Accepted Answer

The answer of Calculate the current ratio of the organization...

Question 16

A divisional manager's performance is evaluated on the basis of the difference between the sales revenues generated by that division and the cost of making those goods and services. The divisional manager is being evaluated using the ________ budget approach.
A)profit
B)revenue
C)cost
D)expense

Accepted Answer

The divisional manager is being evaluated using the profit budget approach, as it considers both sales revenues and costs to determine performance.

Question 17

When a manager is evaluated on the difference between sales revenue and the budgeted cost of making those goods and services, this is an example of a(n)________ budget approach.
A)revenue
B)cash flow
C)expense
D)profit

Accepted Answer

This is an example of a profit budget approach, where the focus is on the difference between sales revenue and the budgeted costs, essentially measuring profitability.

Question 18

Management by objectives is a mechanism of control with ________ organizational control systems.
A)input
B)clan
C)output
D)behavior

Accepted Answer

The answer of Management by objectives is a mechanism of...

Question 19

From the information given below, calculate the organization's current ratio. Total Liabilities = $750,000; Current Liabilities = $220,000; Total Assets = $700,000; Current Assets = $176,000
A)0.65
B)0.25
C)0.70
D)0.80

Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Here, $176,000 / $220,000 = 0.80.

Question 20

The managers of a division are given a fixed budget and are then evaluated on the basis of their ability to produce goods or services. This is an example of a(n)________ budget approach.
A)expense
B)profit
C)cash flow
D)revenue

Accepted Answer

Expense budgets are fixed budgets that are allocated to managers and are used to evaluate their performance based on their ability to produce goods or services.

Quiz 8: Control, Change, and Entrepreneurship

The financial ratio that indicates the degree to which the organization uses debt or equity to finance its ongoing operations is the ________ ratio.

When a manager is told to maximize the revenues from the sales of goods and services produced, this is an example of a(n) ________ budget approach.

Calculate the return on investment from the information given below. Net Income = $18,000; Advertising Expenses = $220,000; Total Liabilities = $120,000; Total Assets = $160,000; Gross Margin = $80,000; Taxes Paid = $2,000

The manager of a profit center is evaluated on the basis of the amount of sales that have been generated from the goods or services produced in his/her division. The divisional manager is being evaluated using the ________ budget approach.

Rules and SOPs are used to regulate the behavior of workers within the organization with a ________ control system.

The financial ratio that measures how well the managers of the organization are creating value from the organization's assets is the ________ ratio.

The most immediate and potent form of behavior control is

A mechanism of control utilized in organizational culture is

From the information given below, calculate the organization's return on investment. Total Liabilities = $300,000; Total Assets = $600,000; Gross Margin = $200,000; Net Income before Taxes = $30,000; Total Expenses = $240,000

With management by objectives, the first things established are

When a divisional manager is evaluated based on the operating income of his division, this is an example of a(n) ________ budget approach.

Rules and SOPs are of little use in telling a scientist how to discover something new. Thus, which of the following forms of control should not be applied to scientists?

The financial ratio that indicates whether or not the organization is capable of paying off its short-term debts without having to sell its inventory is the ________ ratio.

The financial ratio that indicates how efficiently the managers of the organization are collecting the revenue due to the organization from the sale of its products or services is the ________ ratio.

Calculate the current ratio of the organization from the information given below. Sales = $200,000; Gross Profit = $40,000; Total Assets = $450,000; Current Assets = $250,000; Current Liabilities = $300,000

A divisional manager's performance is evaluated on the basis of the difference between the sales revenues generated by that division and the cost of making those goods and services. The divisional manager is being evaluated using the ________ budget approach.

When a manager is evaluated on the difference between sales revenue and the budgeted cost of making those goods and services, this is an example of a(n) ________ budget approach.

Management by objectives is a mechanism of control with ________ organizational control systems.

From the information given below, calculate the organization's current ratio. Total Liabilities = $750,000; Current Liabilities = $220,000; Total Assets = $700,000; Current Assets = $176,000

The managers of a division are given a fixed budget and are then evaluated on the basis of their ability to produce goods or services. This is an example of a(n) ________ budget approach.