Management Accounting Ch 12 Problems

7500 Words Jul 24th, 2010 30 Pages
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
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a. True b. False

29. In general, a discount retail store, such as K-mart, would be expected to have a greater inventory turnover ratio than an automotive retailer. a. True b. False

30. In general, a debt ratio of 60% indicates lower financial risk than a debt ratio of 80%. a. True b. False

MULTIPLE CHOICE

31. Measure of financial control highlight: a. falling profits b. poor quality c. high prices d. unsatisfactory service

32. All of the following are reasons that financial control may be an ineffective scorecard EXCEPT that: a. it fails to identify the causes or drivers of performance b. it focuses on financial measures while ignoring other important attributes of performance c. it focuses on long-term rather than short-term performance measures d. it is an aggregate, rather than a detailed measure of performance

33. Performance measures for financial control include all of the following EXCEPT: a. reduced cycle times b. ROI ( return on investment) and economic value added c. profit d. cost

34. Which of the following statements is FALSE regarding financial and nonfinancial measures of performance? a. Nonfinancial measures may help to anticipate and explain financial
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