Exam 5

Question 1

control cycle

Answer 1

1. set performance standards
2. measure performance
3. compare performance with standards
4. reward successes, correct problems

Answer 2

it is any process that directs the activities of individuals toward the achievement of organizational goals

Question 3

procedures used to verify accounting reports and statements

Answer 3

accounting audits

Question 4

a method of cost accounting designed to identify streams of activity and then to allocate costs across particular business processes according to the amount of time employees devote to particular activities

Answer 4

activity based costing (ABC)

Question 5

a frank and open minded discussion of four basic questions aimed at continuous improvement

Answer 5

after action review

Question 6

control system combining four sets of performance measures: financial, customer satisfaction, business processes and learning and growth

Answer 6

balanced scorecard

Question 7

the process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences

Answer 7

budgeting

Question 8

the use of rules, regulations and authority to guide performance

Answer 8

bureaucratic control

Question 9

control based on the norms, values, shared goals and trust among group members

Answer 9

clan control

Question 10

the control process used while plans are being carried out, including directing, monitoring and finetuning activities as they are performed

Answer 10

concurrent control

Question 11

any process that directs the activities of individuals toward the achievement of organizational goals

Answer 11

control

Question 12

a liquidity ratio that indicates the extent to which short term assets can decline and still be adequate to pay short term liabilities

Answer 12

current ratio

Question 13

a leverage ratio that indicates the company’s ability to meet its long term financial obligations

Answer 13

debt-equity ratio

Question 14

an evaluation conducted by one organization, such as a CPA firm, on another

Answer 14

external audit

Question 15

control that focuses on the use of information about previous results to correct deviations from the acceptable standard

Answer 15

feedback control

Question 16

the control process used before operations begin, including policies, procedures, and rules designed to ensure that planned activities are carried out properly

Answer 16

feedforward control

Question 17

a periodic assessment of a company’s own planning, organizing, leading and controlling processes

Answer 17

internal audit

Question 18

an evaluation of the effectiveness and efficiency of various systems within an organization

Answer 18

management audit

Question 19

focusing on short term earnings and profits at the expense of longer term strategic requirements

Answer 19

management myopia

Question 20

control based on the use of pricing mechanisms and economic information to regulate activities within organizations

Answer 20

market control

Question 21

a managerial principle stating that control is enhanced by concentrating on the exceptions to or significant deviations from the expected result or standard

Answer 21

principle of exception

Question 22

an itemized financial statement of the income and expenses of a company’s operations

Answer 22

profit and loss statement

Question 23

a depiction of how an organization plans to convert its various assets into desired outcomes

Answer 23

strategy map

Question 24

price charged by one unit for a good or service provided to another unit within the organization

Answer 24

transfer price

Question 25

economic, social and environmental performance

Answer 25

triple bottom line (TBL)

Question 26

3 approaches to bureaucratic control

Answer 26

• feedforward control
• concurrent control
• feedback control

Question 27

questions you ask for an after action review:

Answer 27

• what were our intended results?
• what were our actual results?
• what caused our results?
• what will we sustain and improve?

Question 28

problems with bureaucratic control:

Answer 28

• rigid bureaucratic behavior
• tactical behavior
• resistance to control

Question 29

designing effective control systems (customers, people, financial, processes)

Answer 29

• establish valid performance standards
• provide adequate information to employees
• ensure acceptability to employees
• encourage open communication
• use multiple approaches