Question 1

One of the obstacles to effective control is the difficulty in developing appropriate measures of important activities and outputs.

Accepted Answer

Developing appropriate measures is crucial for effective control, but it can be challenging to identify and quantify the most relevant activities and outcomes. Therefore, this statement is true.

Question 2

ABC accounting allows accountants to charge costs more accurately than the traditional method because it allocates overhead far more precisely.

Accepted Answer

ABC (activity-based costing) takes into account different activities that consume resources, and allocates overhead costs accordingly, providing a more accurate representation of the cost of goods or services.

Question 3

The evaluation and control process ensures that the company is achieving what it set out to accomplish.

Accepted Answer

The evaluation and control process is designed to measure and assess the company's performance in meeting its goals and objectives, and to identify areas where improvements can be made. This helps ensure that the company is on track to achieve what it set out to accomplish.

Question 4

The revenue center is measured in terms of efficiency.

Accepted Answer

The revenue center is measured in terms of profitability, not efficiency. It focuses on generating revenue from sales and services.

Question 5

ISO 9000 Standards Series, developed by the International Standards Association of Geneva, Switzerland, is an example of a behavior control.

Accepted Answer

ISO 9000 Standards Series focuses on ensuring quality management, which is a form of behavior control as it aims to regulate and improve the actions and procedures of individuals and organizations.

Question 6

Behavior controls specify how something is to be done through policies, rules, standard operating procedures, and orders from a superior.

Accepted Answer

Behavior controls are designed to guide individuals on how to behave or perform their tasks by laying out policies, rules, SOPs, and directives given by a superior.

Question 7

Operating cash flow is also known as free cash flow.

Accepted Answer

Operating cash flow and free cash flow are two separate concepts. Operating cash flow refers to the cash flow generated from a company's normal business operations, while free cash flow refers to the cash flow available to the company after all capital expenditures have been made.

Question 8

Enterprise risk management is being adopted because of the increasing amount of environmental uncertainty that can affect an entire corporation.

Accepted Answer

Enterprise risk management helps corporations manage and mitigate risks that can arise from environmental uncertainty, such as changes in regulations, market conditions, and natural disasters. Therefore, it is being adopted to ensure the sustainability and resilience of the organization.

Question 9

Stickiness and eyeballs are two non-financial performance measures used by Internet business ventures.

Accepted Answer

Stickiness refers to the ability of a website to keep visitors engaged and coming back, while eyeballs refer to the number of unique visitors or views a website receives.

Question 10

Management audits have been developed to evaluate activities such as corporate social responsibility, functional areas such as the marketing department, and divisions such as the international division.

Accepted Answer

Management audits are a tool to evaluate various aspects of a company's operations, including corporate social responsibility, functional areas like marketing, and divisions such as international.

Question 11

Performance is the end result of activity.

Accepted Answer

Performance is the result or output of an activity, whether it be a task, job or function. It can be measured in terms of quality, quantity, timeliness, and effectiveness.

Question 12

Behavior, output, and input controls are all interchangeable.

Accepted Answer

Behavior, output, and input controls are different types of controls used in information systems. They are not interchangeable as they serve different purposes. Behavior controls are used to regulate and monitor employee behavior, while output controls focus on the output or results of a process. Input controls, on the other hand, ensure the accuracy and completeness of data input into a system.

Question 13

One advantage of using ROI is that it is a single comprehensive figure that includes all revenues, costs, and expenses.

Accepted Answer

ROI (Return on Investment) is a financial metric that takes into account all the costs and revenues associated with a particular investment or project. It provides a single comprehensive figure that represents the financial performance of the investment, making it easier to evaluate its profitability and effectiveness.

Question 14

Unlike ROI, managers cannot manipulate the numbers of EVA.

Accepted Answer

EVA (Economic Value Added) calculations can also be subject to manipulation through the choice of capital charge rate, adjustments in capital employed, and operating income adjustments, similar to how ROI (Return on Investment) figures can be influenced by managerial decisions and accounting practices.

Question 15

The balanced scorecard combines financial measures that tell the results of actions already taken with operational measures on customer satisfaction, internal processes, and the corporation's innovation and improvement activities.

Accepted Answer

This statement is accurate and describes the key elements of the balanced scorecard framework. Financial measures are just one aspect of the framework and are balanced with other measures that focus on the customer, internal processes, and innovation.

Question 16

One example of a steering control used by retail stores is the inventory turnover ratio, which shows how hard an investment in inventory is working.

Accepted Answer

The statement is true. The inventory turnover ratio is a commonly used steering control in retail stores to measure how efficiently inventory is being managed and it reflects how often inventory is sold and restocked during a given period of time.

Question 17

ROI stands for return on incentives.

Accepted Answer

ROI actually stands for return on investment, not return on incentives.

Question 18

EVA may eventually replace ROI as the standard performance measure.

Accepted Answer

EVA (Economic Value Added) is a relatively new performance measure that takes into account the cost of capital and measures the value a business generates beyond its capital cost. Many experts believe that EVA provides a better reflection of a company's true performance than traditional measures such as ROI (Return on Investment). As such, it is possible that EVA may eventually replace ROI as the standard performance measure.

Question 19

ABC is an accounting method for allocating direct and fixed costs to individual products.

Accepted Answer

ABC (Activity-Based Costing) is an accounting method for allocating both direct and indirect costs to individual products or services based on the activities that go into producing them.

Question 20

Evaluation and control information consists only of performance data.

Accepted Answer

Evaluation and control information includes not only performance data, but also analysis and interpretation of the data, as well as plans for making any necessary adjustments or improvements based on the findings.

Quiz 11: Evaluation and Control