Question 1

Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?
A)The Shareholders in a general meeting
B)The Managing director
C)The board of directors in board meeting
D)The audit committee

Accepted Answer

The shareholders in a general meeting are responsible for the appointment of the auditor, assuming it is not the first appointment. This is a standard practice in corporate governance to ensure the auditor's independence from the company's management.

Question 2

A Balanced Scorecard helps the organisation to:
A)Be ready and prepared to implement an ERP
B)Be focus on all the relevant business perspectives
C)Integrate strategy and key challenges
D)Communicate better with staff

Accepted Answer

A Balanced Scorecard helps the organisation to focus on all the relevant business perspectives.

Question 3

According to DuPont analysis, increase in the profit margin (all else constant) should
A)Increase both ROE and ROA
B)Increase ROE but not ROA
C)Increase ROA but not ROE
D)Increase neither ROA nor ROE

Accepted Answer

DuPont analysis breaks down Return on Equity (ROE) into three components: profit margin, asset turnover, and financial leverage. An increase in the profit margin, assuming all else remains constant, directly increases the net income relative to sales, which in turn increases both Return on Assets (ROA) and ROE, as ROA is a component of the DuPont equation (ROA = Net Income / Total Assets, and ROE = Net Income / Shareholder's Equity).

Question 4

DU PONT Analysis deals with
A)Analysis of Current Assets
B)Analysis of Profit
C)Capital Budgeting
D)Analysis of Fixed Assets

Accepted Answer

Du Pont Analysis is a framework used to analyze a company's profitability by breaking down its return on equity into three major components: operating efficiency, asset use efficiency, and financial leverage. It primarily focuses on profit analysis.

Question 5

If return on investment is a measure used on the balanced scorecard, under which perspective would it be listed
A)Financial perspective
B)Customer perspective
C)Learning and growth perspective
D)Internal business perspective

Accepted Answer

Return on Investment (ROI) is a financial metric, so it falls under the Financial perspective on the Balanced Scorecard. This perspective focuses on how well the organization is performing financially, including profitability, growth, and shareholder value.

Question 6

Pitfalls exists the same as with any new technology or management tool. All of the following describe these pitfalls except
A)Some companies use too few measures in their score
B)Some companies include too many measures
C)A poor scorecard is the biggest threat and one of the dangerous pitfalls
D)Some companies do not know how to implement the effective drivers of performance

Accepted Answer

A poor scorecard, while potentially problematic, is not described as the biggest threat or one of the most dangerous pitfalls in the context of new technology or management tool implementation challenges. The other options (A, B, D) accurately describe common pitfalls such as using too few or too many measures and not knowing how to implement effective performance drivers.

Question 7

Responsibility centers include
A)Adjustment centers
B)Call centers
C)Exam centers
D)Profit center

Accepted Answer

Profit centers are a type of responsibility center where managers are responsible for both revenues and costs, and thus the profitability of the unit.

Question 8

Responsibility reports for cost centers
A)Distinguish between fixed and variable costs
B)Use static budget data
C)Include both controllable and non-controllable costs
D)Include only controllable costs

Accepted Answer

Responsibility reports for cost centers focus on costs that managers can control, so they include only controllable costs.

Question 9

Return on Investment may be improved by one of these
A)Increasing Turnover
B)increasing Expenses
C)decreasing Capital Utilization
D)over budgeting

Accepted Answer

Increasing turnover improves Return on Investment (ROI) by generating more revenue from sales without necessarily increasing investment or costs, thus improving the efficiency of capital use.

Question 10

ROI can be viewed as a function of the net profit margin times
A)Sales.
B)EAT.
C)The total asset turnover
D)Equity multiplier

Accepted Answer

ROI (Return on Investment) can be viewed as a function of the net profit margin times the total asset turnover. This is because ROI is calculated by dividing net income by total assets, and this formula can be rearranged to show that ROI is the product of net profit margin (net income divided by sales) and total asset turnover (sales divided by total assets).

Question 11

The following are basic elements in which Continuous Improvement framework (leadership; planning; service orientation; information and analysis; employees and workplace climate; process management; excellence levels and trends
A)Six Sigma
B)Total Quality Management (TQM)
C)Zero Defect
D)Malcolm Baldridge Quality Award

Accepted Answer

The elements listed are part of the criteria for the Malcolm Baldrige Quality Award, which focuses on performance excellence through leadership, strategic planning, customer focus, measurement, analysis, workforce focus, and operations.

Question 12

What is a measure of operating performance that indicates how successful the firm has been at increasing its MVA in a given year.
A)Economic value added (EVA)
B)After-tax cash flow (ATCF)
C)Earnings after taxes (EAT)
D)Market value added (MVA)

Accepted Answer

Economic Value Added (EVA) is a measure of a company's financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit, adjusted for taxes on a cash basis. It shows how successful the firm has been at increasing its value, including MVA, over a given period.

Question 13

What is the term used to describe the value assigned to the goods or services sold or rented from one unit of an organization to another
A)Variable cost
B)Fixed cost
C)Transfer price
D)Full service cost

Accepted Answer

Transfer price is the term used to describe the value assigned to goods or services when these are sold or rented from one unit of an organization to another. This internal pricing mechanism is used for transactions between divisions, subsidiaries, or entities within the same organization.

Question 14

Which of the following statements about performance management systems is not true?
A)Performance management systems are ineffective
B)They encourage a short-term view among managers
C)Recommendations are prescriptive and suggest one best way
D)They improve organisational performance in the long-term

Accepted Answer

The answer of Which of the following statements about performance...

Question 15

Which transfer pricing method will preserve the subunit autonomy?
A)Variable-cost pricing
B)Negotiated pricing
C)Cost-based pricing
D)Full-cost pricing

Accepted Answer

Negotiated pricing allows subunits to negotiate prices with each other, thereby preserving their autonomy by enabling them to make decisions that best suit their individual circumstances and strategies.

Question 16

Evaluation of Capital Budgeting Proposals is based on Cash Flows because:
A)Cash Flows are easy to calculate
B)Cash Flows are suggested by SEBI
C)Cash is more important than profit
D)None of the above

Accepted Answer

Capital budgeting decisions focus on cash flows rather than profits because cash flows provide a more accurate reflection of a project's economic value. Profits can be influenced by non-cash items and accounting choices, whereas cash flows represent the actual cash that will be generated or expended, which is crucial for assessing the investment's potential to generate value.

Question 17

Sale of machine of machine merchandising business is -
A)Capital receipt
B)Capital income
C)Revenue income
D)Revenue receipt

Accepted Answer

The answer of Sale of machine of machine merchandising business...

Question 18

What do we call a formal comparison of the actual costs and benefits of a project with original estimates?
A)Post-completion audit
B)Feedback audit
C)Cost-benefit analysis
D)Business scorecard report

Accepted Answer

A post-completion audit is a formal review of a project after it has been completed, where the actual outcomes (including costs and benefits) are compared against the original estimates to evaluate the project's success and learn lessons for future projects.

Question 19

Compliance with the Standard of Auditing is the responsibility of
A)Management
B)Those charged with governance
C)Auditor
D)Audit committee

Accepted Answer

The responsibility for compliance with the Standards of Auditing lies with the auditor, as these standards guide the auditor's professional responsibilities and the quality of the audit work.

Quiz 4: Accounting and Performance Management

Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?

A Balanced Scorecard helps the organisation to:

According to DuPont analysis, increase in the profit margin (all else constant) should

DU PONT Analysis deals with

If return on investment is a measure used on the balanced scorecard, under which perspective would it be listed

Pitfalls exists the same as with any new technology or management tool. All of the following describe these pitfalls except

Responsibility centers include

Responsibility reports for cost centers

Return on Investment may be improved by one of these

ROI can be viewed as a function of the net profit margin times

The following are basic elements in which Continuous Improvement framework (leadership; planning; service orientation; information and analysis; employees and workplace climate; process management; excellence levels and trends

What is a measure of operating performance that indicates how successful the firm has been at increasing its MVA in a given year.

What is the term used to describe the value assigned to the goods or services sold or rented from one unit of an organization to another

Which of the following statements about performance management systems is not true?

Which transfer pricing method will preserve the subunit autonomy?

Evaluation of Capital Budgeting Proposals is based on Cash Flows because:

Sale of machine of machine merchandising business is -

What do we call a formal comparison of the actual costs and benefits of a project with original estimates?

Compliance with the Standard of Auditing is the responsibility of