Question 1

Incremental budgeting allocates increased or decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are reviewed.

Accepted Answer

Incremental budgeting is based on previous budget periods and only incremental changes are reviewed.

Question 2

The RATER scale enables customers to rate the quality of service along five dimensions.

Accepted Answer

The RATER scale stands for Reliability, Assurance, Tangibles, Empathy, and Responsiveness. It is a tool used to measure customer satisfaction with service quality based on these five dimensions.

Question 3

Only incremental changes in the budget request are reviewed in incremental budgeting.

Accepted Answer

Incremental budgeting is a budgeting process where the budget for the next period is based on the budget for the current period with only incremental changes made to it. Therefore, only incremental changes in the budget request are reviewed in incremental budgeting.

Question 4

A variable budget does not allow the allocation of resources to vary in proportion with various levels of activity.

Accepted Answer

A variable budget allows the allocation of resources to vary in proportion with various levels of activity.That is,the budget can be adjusted over time to accommodate pertinent changes in the environment.

Question 5

In Deming's PDCA cycle, "D" stands for "do," which means to implement the change or make a small-scale test.

Accepted Answer

In Deming's PDCA cycle, "D" stands for "do," which refers to implementing the change or conducting a small-scale test.

Question 6

A capital expenditures budget anticipates investments in major assets such as land, buildings, and major equipment.

Accepted Answer

A capital expenditures budget is used to plan for investments in major assets that will provide long-term benefits to the organization, such as land, buildings, and major equipment. This budget typically covers a period of several years and helps ensure that funds are available for these large capital investments when needed.

Question 7

One advantage with incremental budgets is that they are flexible in meeting environmental demands.

Accepted Answer

One difficulty is that incremental budgets tend to lock departments into stable spending arrangements;they are not flexible in meeting environmental demands.

Question 8

On her first visit to a new doctor's office, Candace noted the fine furniture in the pristine lobby and the crisp white coats that each of the staff wore. Candace was judging the tangibles dimension of the RATER scale.

Accepted Answer

The tangibles dimension of the RATER scale assesses physical facilities, equipment, and appearance of personnel. Candace's observations of the furniture and staff clothing fall under this dimension.

Question 9

The point of an audit is to provide a yardstick against which managers can measure performance and make comparisons as with other departments or previous years.

Accepted Answer

The point of a budget is to provide a yardstick against which managers can measure performance and make comparisons (as with other departments or previous years).

Question 10

A variable budget can be adjusted over time to accommodate pertinent changes in the environment.

Accepted Answer

A variable budget is designed to be flexible and can be adjusted as needed based on changes in the environment or circumstances. This allows organizations to quickly adapt their budget to meet new challenges or take advantage of new opportunities.

Question 11

A principle of Deming management is that quality should be aimed at meeting the needs and expectations of the ultimate user.

Accepted Answer

This is a fundamental principle of Deming's management philosophy, also known as Total Quality Management (TQM). Deming emphasized the importance of focusing on the needs of the customer in all aspects of the business, from product design to delivery and service. By meeting or exceeding the customer's expectations, organizations can improve customer satisfaction, loyalty, and ultimately, their bottom line.

Question 12

TQM assumes that, if given empowerment, employees will focus on quality.

Accepted Answer

TQM (Total Quality Management) is based on the belief that quality is everyone's responsibility and that if employees are given the necessary tools, training, and authority, they will focus on continuous improvement and quality. Empowerment is a key aspect of TQM, as it allows employees to take ownership of their work and make decisions that will benefit the quality of the end product or service. Therefore, the statement is true.

Question 13

The singular task of internal auditors is to verify that the organization, in preparing its financial statements, followed generally accepted accounting principles.

Accepted Answer

While verifying financial statements is an important part of their role, internal auditors are also responsible for evaluating and improving the effectiveness of risk management, control, and governance processes within the organization.

Question 14

An external audit is a verification of an organization's financial accounts and statements by the organization's own professional staff.

Accepted Answer

An external audit is conducted by an independent third-party auditor who is not affiliated with the organization being audited.

Question 15

A formal financial projection is known as an external audit.

Accepted Answer

A formal financial projection is known as a financial forecast or financial projection, while an external audit is an independent review of a company's financial statements by a third-party accounting firm.

Question 16

A balance sheet summarizes an organization's overall financial worth, or its assets and liabilities, at a specific point in time.

Accepted Answer

A balance sheet provides a snapshot of an organization's financial standing by listing its assets (what it owns) and liabilities (what it owes) as of a specific date.

Question 17

Ratio analysis is the practice of evaluating financial ratios to determine an organization's financial health.

Accepted Answer

This statement accurately defines ratio analysis as a method for assessing an organization's financial condition by analyzing various financial ratios.

Question 18

TQM assumes that continuous improvement must be an everyday matter and that no improvement is too small.

Accepted Answer

TQM (Total Quality Management) emphasizes the importance of constant and incremental improvement in every aspect of an organization. This means that no improvement is too small and that even minor changes can lead to significant improvements in quality over time. Therefore, TQM assumes that continuous improvement must be an everyday matter.

Question 19

The two core principles of TQM are people orientation and productivity orientation.

Accepted Answer

The two core principles of TQM are (1)people orientation,in which everyone involved with the organization should focus on delivering value to customers;and (2)improvement orientation,in which everyone should work on continuously improving the work processes.

Question 20

An income statement summarizes an organization's financial results over a specified period of time, such as a quarter or a year.

Accepted Answer

An income statement is a financial statement that reports an organization's financial results over a specified period of time, typically a quarter or a year. It includes revenue, expenses, and net income (or net loss) for the given period.

Quiz 16: Control Systems and Quality Management: Techniques for Enhancing Organizational Effectiveness