Management Accounting Ch 12 Problems

CHAPTER 12
FINANCIAL CONTROL

TRUE/FALSE

1. Financial control involves the use of financial measures to assess organizational and management performance. a. True b. False

2. Financial measures identify what is wrong with an organization, not simply provide a signal that something needs attention. a. True b. False

3. Financial measures can highlight falling sales and profits in an organization, but only nonfinancial measures can identify why this is occurring. a. True b. False

4. Properly chosen nonfinancial measures anticipate and help to explain financial results in an organization. a. True b. False

5. In a centralized organization, front-line employees are trained to respond to changes in the business environment. a. True b. False

6. The amount of decentralization in an organization reflects the organization’s trust in its employees and other factors. a. True b. False

7. When an organization moves to decentralized decision making, control moves from results control to task control. a. True b. False

8. For an organization to be successful, activities within sales, manufacturing, and customer service need to be coordinated. a. True b. False

9. Organizations use nonfinancial control to provide a summary measure of how well their systems of operations control are working. a. True b. False

10. Properly chosen nonfinancial measures anticipate and explain financial results. a. True b. False

11. A support department, such as human resources, should be evaluated as a revenue center. a. True b. False

12. A major problem faced by cost centers is assigning jointly earned revenues. a. True b. False

13. A profit center is like an independent business. a. True b. False

14. The performance measures chosen should influence the employees’ decision-making behavior. a. True