CPP 2012 Domain 2: Business Principles and Practices Flashcards
What are the three standard financial reports?
Income statement,
Balance sheet,
Statement of cash flows.
Source: POA: Security Management, 2.2, page 15
What does an income statement show?
Revenue,
Expenses,
Net income over a defined period.
Source: POA: Security Management, 2.2.1, page 15
What is the underlying equation of the balance sheet?
Assets = liabilities + shareholder equity.
Source: POA: Security Management, 2.2.2, page 17
What does a balance sheet show?
A summary of an organization’s investing and financing.
Source: POA: Security Management, 2.2.2, page 17
What does a cash flow statement show?
How cash inflows and outflows affect an organization.
Source: POA: Security Management, 2.2.3, page 20
What three elements are depicted in a cash flow statement?
Net operating cash flow,
Net investing cash flow,
Financing cash flow.
Source: POA: Security Management, 2.2.3, page 20
Which two ratios show how an organization has done in making money during a reporting period?
Return on assets = net income/total assets,
Return on equity = net income/shareholder equity.
Source: POA: Security Management, 2.3.1, page 23
What are the three ways to measure profit margins?
What are the three ways to measure profit margins?
Gross profit margin = (revenue – cost of goods sold – general and administrative costs)/revenue,
Operating margin = EBITA (earnings before interest, taxes, and amortization)/revenue,
Net profit margin = net income/revenue.
Source: POA: Security Management, 2.3.1, page 22
Which two earnings-related ratios are commonly examined in financial analysis?
Earnings per share = net income/total shares,
Price to earnings = price per share/earnings per share.
Source: POA: Security Management, 2.3.1, page 24
What is the current ratio?
The current ratio is a measure of a company’s ability to cover short-term obligations.
Current ratio = current assets/current liabilities.
Source: POA: Security Management, 2.3.2, page 25
What is the quick ratio?
The quick ratio is a measure of an organization’s ability to cover current liabilities with current assets that can be quickly converted to cash.
Quick ratio = (cash + securities + accounts receivable)/current liabilities
Source: POA: Security Management, 2.3.2, page 25
What is the debt to equity ratio?
The debt to equity ratio is a measure of a company’s long-term financial health.
Debt to equity ratio = total liabilities/shareholder equity.
Source: POA: Security Management, 2.3.2, page 25
What are the three main limitations of financial statement analysis?
It doesn’t directly consider changes in market conditions,
All organizations operate differently and target different markets,
Financial reports must be accurate for financial ratios to have meaning.
Source: POA: Security Management, 2.4, page 26
What is a primary benefit of zero-based budgeting?
Zero-based budgeting may force managers to consider alternative ways of getting the job done.
Source: POA: Security Management, 2.5, page 27
What is generally the most practical approach to budget development?
A combination of top-down and bottom-up processes.
Source: POA: Security Management, 2.5, page 27
What is an effective way of setting the value of line items in a budget?
Look at each budget expense as an investment and calculate the expected return on that investment.
Source: POA: Security Management, 2.5, page 28
Why might lower-level managers more readily accept a bottom-up budget?
Because they had a role in developing it.
Source: POA: Security Management, 2.5.2, page 29
Who should be involved in developing a standard?
A broad group of stakeholders and interested parties, working collaboratively.
Source: POA: Security Management, 3.1.3, page 37
What organization is the world’s largest developer of international standards?
ISO, the International Organization for Standardization.
Source: POA: Security Management, 3.2, page 38
What are the five pillars of ISO standards?
Equal footing of members, Market need, Consensus, Voluntary participation and application, Worldwide applicability. Source: POA: Security Management, 3.2.1, page 38
What organization is the administrator and coordinator of the U.S. private sector voluntary standardization system?
The American National Standards Institute (ANSI).
Source: POA: Security Management, 3.3.1, page 40
Which stakeholder group drives the ANSI standards development process?
Standards users.
Source: POA: Security Management, 3.3.2, page 41
What is the operating principle of ISO’s management systems standards?
The Plan-Do-Check-Act cycle.
Source: POA: Security Management, 3.4.3, page 46
Who should be involved in developing a job requirements analysis?
The hiring manager,
Other team members,
Organizational leaders.
Source: POA: Security Management, 1.3.1, page 6
What’s the best way to recruit a good candidate for a job?
Internal recommendations.
Source: POA: Security Management, 1.3.1, page 7
What are a company’s top two most valuable resources?
#1 is employees, #2 is corporate knowledge. Source: POA: Security Management, 1.3.2, page 7
What are the five basic functions of management?
Planning, Organizing, Directing, Coordinating, Controlling. Source: POA: Security Management, 4.4.1, page 85
According to Peter Drucker, what is the most crucial question in defining business purpose and mission?
“Who is the customer?”
Source: POA: Security Management, 4.4.1, page 85
What is the rule of thumb for allocating for spare parts purchases in a budget?
About 5 percent of the capital cost of equipment for a location should be allocated each year for spare parts.
Source: POA: Physical Security, 12.12.1, page 379
How long should a strategic plan look out into the future?
Three to five years.
Source: POA: Security Management, 1.2, page 3
What is the “span of control” principle?
A single person can supervise only a limited number of staff members effectively (generally, up to 10).
Source: POA: Security Management, 4.4.3, page 87
What is unity of command?
An individual should report to only one supervisor.
Source: POA: Security Management, 4.4.3, page 88
Where should an organization’s most senior security professional report in the organization?
Directly to senior or executive management.
Source: POA: Security Management, 4.4.3, page 88
What is McGregor’s Theory X?
McGregor’s Theory X says that an average worker is lazy and lacks ambition. Workers must be pushed by a hard-driving, authoritarian manager.
Source: POA: Security Management, 4.5.1, page 90; POA: Security Officer Operations, 3.2.1, page 47
What is McGregor’s Theory Y?
McGregor’s Theory Y says that workers will seek greater responsibility in the right environment. They can exercise self-direction, motivation, ingenuity, and creativity.
Source: POA: Security Management, 4.5.1, page 90; POA: Security Officer Operations, 3.2.1, page 47
What is Herzberg’s behavioral theory?
Herzberg’s behavioral theory says that good job performance is a function of hygiene or maintenance factors, such as job security and working conditions, as well as satisfiers or motivators, such as recognition and advancement.
Source: POA: Security Management, 4.5.1, page 90; POA: Security Officer Operations, 3.2.1, page 48
What is the Argyris behavioral theory?
The Argyris behavioral theory says that traditional organizational principles and structures are incompatible with the mental health of employees. They cause workers to become apathetic, self-protective, or combative.
Source: POA: Security Officer Operations, 3.2.1, page 49
What is Warren Bennis’s behavioral theory?
Warren Bennis’s behavioral theory says organizations can be adaptive, problem solving, and innovative. Future organizations will be based on free and full communication, consensus, influence based on competence, and a climate that allows for expression of emotions.
Source: POA: Security Officer Operations, 3.2.1, page 49
What are the components of the Big Five Model of Personality?
Surgency (leadership and extroversion), Agreeableness, Adjustment, Conscientiousness, Openness to experience. Source: POA: Security Officer Operations, 3.5.1, page 56
What term describes expectation of competent performance by a security officer?
Vigilant performance.
Source: POA: Security Officer Operations, 3.1, page 44
At what hours do officer accidents caused by fatigue peak?
Officer accidents caused by fatigue peak at 0300 and 1500 (3:00 a.m. and 3:00 p.m.).
Source: POA: Security Officer Operations, 3.2, page 46
What is the most effective way to maintain officer vigilance?
Systematically rotate duties, at two- to four-hour intervals, between fixed post and roving patrol assignments.
Source: POA: Security Officer Operations, 3.6.8, page 61
What are the three types of learning for officer training?
Cognitive (mental),
Affective (emotional),
Psychomotor (physical).
Source: POA: Security Officer Operations, 4.2.1, pages 66-67
What are the three elements of an officer’s personal development?
Education,
Training,
Guided experience.
Source: POA: Security Officer Operations, 4.2.4, page 67
What are the six major benefits of officer training?
Improved job performance, Ease of supervision, Procedure review, Staff motivation, Reduced turnover, Legal protection. Source: POA: Security Officer Operations, 4.3, pages 69-71
If officer training is needed immediately, what are the best options?
Off-the-shelf programs,
Contracted trainers.
Source: POA: Security Officer Operations, 4.5, page 73
What are Knowles’s principles of andragogy?
A theory of adult learning that assumes adults are self-directed and will take responsibility for their own learning needs.
Source: POA: Security Officer Operations, 4.5, page 73
Why aren’t participant evaluations good as training evaluation tools?
Participant evaluations do not measure actual learning; instead, they validate what learners think they learned.
Source: POA: Security Officer Operations, 4.5.3, page 75
When is the case study method of training most effective?
When students work together in groups and actively have discussions.
Source: POA: Security Officer Operations, 4.6.2, page 76
In most security environments, what type of training methodology works best?
Mentoring.
Source: POA: Security Officer Operations, 4.6.6, pages 77-78
What are six ways to overcome limiting training budgets?
Use off the shelf programs,
Outsource training to a community college or technical institution, Look for grant funding,
Join professional organizations such as ASIS,
Share instructional materials,
Use distance learning.
Source: POA: Security Officer Operations, 4.8.1, pages 79-80
What is the “Frog Syndrome”?
A scenario in which managers believe that they can train all their subordinates personally. They jump into the project and then jump out when they are overwhelmed by the workload.
Source: POA: Security Officer Operations, 4.8.5, page 82
What five roles can security officers play?
Management representative,
Intelligence agent,
Enforcement/compliance agent,
Legal consultant,
Physical security/crime prevention specialist.
Source: POA: Security Officer Operations, 4.10, page 97-99
What is the best way to get many different types of particularized training for small groups of officers?
Outsourcing.
Source: POA: Security Officer Operations, 4.11.4, page 103
What is generally the largest item in the operating budget of a security department?
Personnel costs.
Source: POA: Security Officer Operations, 5.1.1., page 108
In a security services contract, what should the scope of work specify?
Security tasks,
Days and hours of performance,
Total number of hours to be worked.
Source: POA: Security Officer Operations, 5.1.2, page 112
Who should set the compensation policy for contract security officers?
Security managers in the contracting company, not its purchasing staff, should set compensation policy.
Source: POA: Security Officer Operations, 5.1.4, page 113
What is the first criterion in evaluating bids for security services?
Complying with the submission deadline.
Source: POA: Security Officer Operations, 5.3.1, page 116
A contracting organization should hire its own supervisor for contract personnel when those personnel work more than how many hours per week?
400
Source: POA: Security Officer Operations, 5.3.1, page 116
What are three alternative approaches to calculating loss event criticality other than the cost of loss formula?
Known frequency rate,
Nominal numerical probability,
Scatter plots.
Source: General Security Risk Assessment Guideline, pages 21-22
What is a fidelity bond?
A fidelity bond is insurance that covers losses created by dishonest employees.
Source: POA: Security Management, 4, Appendix A, page 98
Assuming officers work 40 hours/week, and each post is staffed 24/7, what is the minimum number of officers required for each post?
4.2 officers, or 4.5 officers when holidays, vacation, and sick time are included in the calculation.
Source: POA: Security Officer Operations, 1.3, page 3
