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Indicate whether the statement is true or false.
1. The system of governing an organization so that the interests of corporate owners are protected refers to corporate
governance.
a. True
b. False
2. The basic assumption of hierarchical control is that people are incapable of self-discipline and cannot be trusted.
a. True
b. False
3. A standard for performance is included in an organization’s overall strategic plan to compare organizational activities
against.
a. True
b. False
4. The final step of the feedback control model is to do nothing if performance is adequate or to take corrective action if
performance is inadequate.
a. True
b. False
5. Most organizations measure and control performance using qualitative financial measures.
a. True
b. False
6. A process in which lower-level managers anticipate their departments’ resource needs and pass them to top
management for approval is called top-down budgeting.
a. True
b. False
7. Bottom-up budgeting is a process in which lower-level managers anticipate their department’s resource needs and pass
them up to top management for approval.
a. True
b. False
8. Very high expectations from senior management and a desire to share authority by middle managers are two of the
positive factors leading to success of TQM.
a. True
b. False
9. The initial cost of implementing the SOX reforms is relatively minor for a small business once it becomes public.
a. True
b. False
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10. Continuous improvement is the implementation of a large number of small, incremental improvements in all areas of
the organization on an ongoing basis.
a. True
b. False
11. The liquidity ratio shows the company’s ability to meet its current debt obligations.
a. True
b. False
12. An activity ratio that measures how many times the inventory is turned over to meet the total sales figure is called the
inventory turnover.
a. True
b. False
13. The income statement shows revenues coming into the organization from all sources and subtracts all expenses.
a. True
b. False
14. The implementation of total quality management involves the use of many techniques such as quality circles,
benchmarking, Six Sigma principles, quality partnering, and continuous improvement.
a. True
b. False
15. Customer service, external business processes, financial performances, and the organization’s capacity for learning and
growth are the four major perspectives of the balanced scorecard.
a. True
b. False
16. A cash budget estimates receipts and expenditures of money on a daily or weekly basis.
a. True
b. False
17. The systematic process of regulating organizational activities to make them consistent with the expectations
established in plans, targets, and standards of performance refers to organizational control.
a. True
b. False
18. The certification based on a set of international standards for quality management, setting uniform guidelines for
processes to ensure that products conform to customer requirements is the ISO certification.
a. True
b. False
19. An expense budget lists forecasted and actual revenues of the organization.
a. True
b. False
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20. The goal of open-book management is to get every employee thinking and acting like a business owner.
a. True
b. False
21. An organization-wide effort to infuse quality into every activity in a company through continuous improvement
defines Six Sigma.
a. True
b. False
22. TQM tends to be most successful when it enriches jobs and improves employee motivation.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
23. __________ standards represent an international standard for quality management.
a. ISO 9000
b. Six Sigma
c. TQM
d. Kaizen
e. Foreign Economy Index
24. Stella, a systems manager for a large technology company, would like to get an understanding of her company’s
financial position with respect to assets and liabilities at the end of the fiscal year. To which of the following should she
refer?
a. Income statement
b. Activity ratio
c. TQM report
d. Balance sheet
e. Balance scorecard
25. Which of the following refers to the system of governing an organization so that the interests of corporate owners are
protected?
a. Quality circle
b. Corporate governance
c. ISO certification
d. Open-book management
e. Balance scorecard
26. Decentralized control is usually implemented in all of the following areas, EXCEPT:
a. self-control.
b. peer group.
c. corporate culture.
d. employee selection and socialization.
e. the quality control department.
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27. In the process of implementing the balanced scorecard approach at his company, operations manager Seth Howard
wonders whether internal activities and processes add value for customers and shareholders. This involves which of the
following dimensions of the balanced scorecard?
a. Customer service
b. Potential for learning and growth
c. Financial performance
d. External business processes
e. Internal business processes
28. All of the following are key steps of setting up feedback control systems, EXCEPT:
a. comparing performance to standards.
b. establishing standards of performance.
c. getting employee opinions.
d. measuring actual performance.
e. taking corrective action.
29. A quality circle is a group of __________ volunteer employees.
a. 2 to 4
b. 6 to 12
c. 10 to 20
d. 15 to 25
e. 30 to 50
30. At LBK Industries, responsibility for quality control rests with a team of quality control inspectors and supervisors
rather than with employees. LBK uses which of the following types of organizational control?
a. Matrix control
b. Hierarchical control
c. Decentralized control
d. Bottom-up control
e. Balanced control
31. The __________ plans future investments in major assets to be depreciated over several years.
a. capital budget
b. balance sheet budget
c. cash budget
d. revenue budget
e. profit budget
32. Which of the following is a quality control approach that emphasizes a relentless pursuit of higher quality and lower
costs?
a. Continuous improvement
b. Cycle time
c. Quality circles
d. Six Sigma
e. Benchmarking
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33. Which of the following countries has the most secretive economy?
a. Russia
b. Nigeria
c. Mexico
d. Germany
e. Singapore
34. The highest total number of ISO 9000 certifications is held in:
a. the United States.
b. South America.
c. Europe.
d. China.
e. Africa.
35. According to the control model, after establishing standards of performance, the manager should:
a. compare performance to standards.
b. get the standards approved by the supervisors and subordinates.
c. measure actual performance.
d. take corrective action.
e. provide feedback.
36. What is the first step in the feedback control system?
a. Establishing strategic objectives
b. Establishing standards of performance
c. Taking corrective action
d. Comparing performance to standards
e. Measuring actual performance
37. Net income divided by sales is the correct formula for calculating:
a. return on total assets.
b. a current ratio.
c. a liquidity ratio.
d. profit margin on sales.
e. a corporate evaluation.
38. Contingency factors that can influence the success of a TQM program in a negative way include all of the following,
EXCEPT:
a. tasks make high skill demands on employees.
b. management expectations are unrealistically high.
c. middle managers are dissatisfied about loss of authority.
d. workers are dissatisfied with other aspects of organizational life.
e. managers wait for big, dramatic innovations.
39. Which of the following includes anticipated and actual expenses for a responsibility center?
a. Revenue budget
b. Cash budget
c. Capital budget
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d. Expense budget
e. Operating budget
40. All well-designed control systems involve the use of __________ to determine whether performance meets
established standards.
a. opinions
b. advice
c. consultants
d. benchmarks
e. feedback
41. Silver n’ Gold Inc. recently introduced a new control philosophy where all employees have access to the same
information that owners have, such as what money is coming in and where it is going. This is an example of which of the
following?
a. Balanced scorecard
b. Six Sigma
c. Continuous improvement
d. Total quality management
e. Open-book management
42. Tammy is a production manager at Eagle’s Nest, Inc. She is concerned that too much money is being wasted on
inventory that is sitting in the warehouse too long. She should calculate a(n):
a. current ratio.
b. inventory turnover ratio.
c. conversion ratio.
d. profitability ratio.
e. leverage ratio.
43. Brad is a department manager at Home Theater, Inc. His sole role in the budget process is to implement the budget
that is developed for him. This is an example of:
a. strategic budgeting.
b. operational budgeting.
c. top-down budgeting.
d. management-by-objectives.
e. bottom-up budgeting.
44. Which of the following is the process of measuring your organizational process against the best in the industry?
a. Outsourcing
b. Continuous improvement
c. Environmental analysis
d. Benchmarking
e. Competitive measurement
45. Ophelia, the new CEO at Odyssey Inc., plans to implement a highly effective systematic process of regulating
organizational activities to make them consistent with the expectations that are established by managers within the
company. This is referred to as __________ control.
a. organizational
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b. feedback
c. budgetary
d. systems
e. quality
Enter the appropriate word(s) to complete the statement.
46. A(n) __________ ratio indicates an organization’s ability to meet its current debt obligations.
47. The __________ provides three types of information: assets, liabilities, and owners’ equity.
48. The implementation of a large number of small, incremental improvements in all areas of the organization on an
ongoing basis is referred to as __________.
49. When __________ deviates from a(n) __________, managers must interpret the deviation.
50. __________ focuses on whether performance meets established standards.
51. __________ refers to the system of governing an organization so that the interests of corporate owners are protected.
52. In a traditional __________ approach, budgeted amounts for the coming year are imposed on middle- and lower-level
managers.
53. __________ control uses cultural values, traditions, shared beliefs, and trust to foster generate compliance with
organizational goals.
54. A(n) __________ includes anticipated and actual expenses for each responsibility center and for the total organization.
55. The continuous process of measuring products, services, and practices against major competitors or industry leaders is
called _________.
56. A budgeting process in which lower-level managers budget their departments’ resource needs and pass them up to top
management for approval is called __________ budgeting.
57. The __________ lists planned investments in major assets such as buildings, heavy machinery, or complex
information technology systems, often involving expenditures over more than a year
58. A(n) __________ ratio measures internal performance with respect to key activities defined by management.
59. Sharing financial information and results with all employees in the organization is called __________ management.
60. List the four major perspectives of a balanced scorecard.
61. List the four steps in the feedback control model.
62. Describe the difference between a balance sheet and an income statement.
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63. Compare hierarchical control with decentralized control.
64. Discuss open-book management and the balanced scorecard.
65. In a TQM program, what is benchmarking?
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Answer Key
1. True
2. True
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