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III)
Q.2).
a)
b)
c)
d)
Q.5).
a)
b)
c)
d)
Q.6).
a)
b)
c)
d)
Ans: a
Q.7).
a)
b)
c)
d)
Q.8).
a)
b)
c)
d)
Q.9).
a)
b)
c)
d)
Q.10).
a)
b)
c)
d)
Q.11).
a)
b)
c)
d)
Q.13).
a)
b)
c)
d)
Q.14).
a)
b)
c)
d)
Q.15). In a responsibility report for a profit center, controllable fixed costs are deducted from
contribution margin to show:
a) Profit center margin.
b) Controllable margin.
c) Net income.
d) Income from operations.
Q.16). In the formula for return on investment (ROI), the factors for controllable margin and
operating assets are, respectively:
a) Controllable margin percentage and total operating assets.
b) Controllable margin dollars and average operating assets.
c) Controllable margin dollars and total assets.
d) Controllable margin percentage and average operating assets.
Q.17).
a)
b)
c)
d)
Q.18).
a)
b)
c)
d)
In the formula for residual income, the factors for computing residual income are:
Contribution margin, controllable margin, and average operating assets.
Controllable margin, average operating assets, and ROI.
Controllable margin, average operating assets, and minimum rate of return.
Controllable margin, ROI, and minimum rate of return.
Q.19). When managers of subunits throughout an organization strive to achieve the goals
set by top management, the result is:
a) Goal congruence.
b) Planning and control.
c) Responsibility accounting.
3
Q.23). A responsibility center in which the manager is held accountable for the profitable use
of assets and capital is commonly known as a(n):
a) Cost center.
b) Revenue center.
c) Profit center.
d) Investment center.
Q.24).
a)
b)
c)
d)
Q.25). Performance reports provide feedback to managers and allow them to better control
operations.
II. Many performance reports have budget, actual, and variance data.
III. Performance reports are often structured around a firm's organizational hierarchy
that is, data relating to lower-level units (e.g., departments) are combined and flow into
4
Q.28). For a company that uses responsibility accounting, which of the following costs is
least likely to appear on a performance report of an assembly-line supervisor?
a) Direct materials used.
b) Departmental supplies.
c) Assembly-line labor.
d) Assembly-line facilities depreciation.
Q.29). A Balanced Scorecard helps the organisation to:
a)
b)
c)
d)
Q.30). The method of calculating return on assets which highlights the importance of sales,
profit margin and asset turnover is known as
a)
b)
c)
d)
Q.31).
_______________ is a measure of operating performance that indicates how
successful the firm has been at increasing its MVA in a given year.
a)
b)
c)
d)
Q.32). ROI can be viewed as a function of the net profit margin times
a)
b)
c)
d)
Sales.
EAT.
The total asset turnover.
Equity multiplier.
Profitability ratio
Net profit margin ratio
Times interest earned ratio
return on investment ratio
UNIT 2
Q.34).
a)
b)
c)
d)
Ans: c
Q.35). If capital expense is recorded as revenue expense then which calculation will be
wrong?
a) Bank balance
b) Debtors
c) Creditors
d) Net profit
Ans: d
Q.36). Capital expenditure
i)
Car purchased for sale
6
i & ii
ii & iii
i & iii
i, ii & iii
Ans: b
Q.37).
a)
b)
c)
d)
Ans: d
Q.38).
i)
ii)
iii)
i & ii
ii & iii
i & iii
ii
Ans: b
Ans: b c & d
Q.39). What do we call a formal comparison of the actual costs and benefits of a project with
original estimates?
a)
b)
c)
d)
Post-completion audit
Feedback audit
Cost-benefit analysis
Business scorecard report
Ans: a
Q.40). What is the term used to describe the value assigned to the goods or services sold or
rented from one unit of an organization to another
Variable cost
Fixed cost
Transfer price
Full service cost
Ans: c
Q.41). What should be added to the opportunity cost of the resource at the point of transfer to
obtain the general principle transfer price that leads managers to make decisions in a firm's
best interest?
a)
b)
c)
d)
Sunk cost
Variable cost
Outlay cost
Transfer cost
Ans: c
Q.42). If an intermediate market exists, the general rule is that the optimal transfer price should
be the:
a)
b)
c)
d)
Ans: c
Q.43). Which transfer pricing method will preserve the subunit autonomy?
a)
b)
c)
d)
Variable-cost pricing
Negotiated pricing
Cost-based pricing
Full-cost pricing
Ans: b
Q.44). When a perfectly competitive market exists and the firm uses market-based transfer
pricing, the firm can achieve all of the following except for:
a)
b)
c)
d)
Management effort
Subunit performance evaluation
Price monopoly
Goal congruence
Ans: c
Ans: b
Q.45). Asset utilization ratios measure all of the following except
a)
b)
c)
d)
Ans: d
Q.46). Financial ratios are used to weigh and evaluate:
a)
b)
c)
d)
Ans: a
Ans: a
Q.47). What is not included in a firms expenses?
a)
b)
c)
d)
Ans: d
Ans: c
Q.48). If a significant portion of the assets of a firm has a market value ________ book value,
the quality of the firms balance sheet is reduced.
a)
b)
c)
d)
Equal to
Substantially below
Substantially above
None of the above
Ans: b
Ans: c
Q.49). Which of the following variable does ROI examine?
a) Eat
b) Sales
c) Total assets
9
EBIT
EVA
ROI
DuPont chart
Ans: b
Q.51). Return on Assets and Return on Investment Ratios belong to:
a)
b)
c)
d)
Liquidity Ratios
Profitability Ratios,
Solvency Ratios,
Turnover
Ans: b
Investment Decision,
Working Capital Management
Marketing Management,
Capital Structure.
Ans: a
Q.53). Capital Budgeting deals with:
a)
b)
c)
d)
e)
Long-term Decisions,
Short-term Decisions,
Both (a) and (b),
Neither
nor (b).
Ans: a
Q.54). Which of the following is not used in Capital Budgeting?
a)
b)
c)
d)
Ans: c
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Reversible,
Irreversible,
Unimportant,
All of the above.
Ans: b
Q.56). Which of the following is not incorporated in Capital Budgeting?
a)
b)
c)
d)
Tax-Effect,
Time Value of Money,
Required Rate of Return,
Rate of Cash Discount.
Ans: d
Expansion Programme,
Merger,
Replacement of an Asset,
Inventory Level.
Ans: d
Q.58). A sound Capital Budgeting technique is based on:
a)
b)
c)
d)
Cash Flows,
Accounting Profit,
Interest Rate on Borrowings,
Last Dividend Paid.
Ans: a
Q.59). Which of the following is not a relevant cost in Capital Budgeting?
a)
b)
c)
d)
Sunk Cost,
Opportunity Cost,
Allocated Overheads,
Both (a) and (c) above.
Ans: d
Q.60). Capital Budgeting Decisions are based on:
a) Incremental Profit,
11
Salvage Value,
Depreciation Amount,
Tax Rate Change,
Method of Project Financing.
Ans: d
Ans: c
Q.63). Which measure of performance is arguably most useful to shareholders
a)
b)
c)
d)
Ans: b
Q.64). The balanced scorecard approach is a framework for measuring performance based on
four factors. These are 'innovation and learning', 'the customer perspective', 'the internal
perspective' and:
a)
b)
c)
d)
Ans: c
Q.65). The Balanced Scorecard approach has been criticized for leaving out certain measures.
One of these is:
12
Financial measures
Employee satisfaction measures
Customer satisfaction measures
Technological innovation measures
Ans: b
Q.66). How many measures do Kaplan and Norton recommend an organization should include
when using the balanced scorecard approach?
a)
b)
c)
d)
10-20
20-30
50-100
80-120
Ans: b
Q.67). In the balanced scorecard approach quality would come under which perspective?
a)
b)
c)
d)
Ans: a
Q.68). The U.S. National Quality Award is named after
a)
b)
c)
d)
Joseph Juran
Genichi Taguchi
W. Edwards Deming
Malcolm Baldrige
Ans: d
Q.69). The overall purpose of the balanced scorecard approach is to:
a)
b)
c)
d)
Ans: a
Q.70). The problem with using financial measures alone to measure organizational
performance is that:
a)
b)
c)
d)
Ans: a
Q.71). Which of the following is not true with reference capital budgeting?
a)
b)
c)
d)
Ans: c
Ans: c
Q.73). Which of the following is not true for capital budgeting?
a)
b)
c)
d)
Ans: b
Q.74). Which of the following is not applied in capital budgeting?
a)
b)
c)
d)
Ans: c
Q.75). Evaluation of Capital Budgeting Proposals is based on Cash Flows because:
a)
b)
c)
d)
Ans: c
Q.76). Which of the following is not included in incremental A flows?
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Opportunity Costs,
Sunk Costs,
Change in Working Capital,
Inflation effect.
Ans: b
Ans: c
Q.78). In Capital Budgeting, Sunk cost is excluded because it is:
a)
b)
c)
d)
Of Small Amount,
Not Incremental,
Not Reversible,
All of the Above.
Ans: b
Q.79). Savings in respect of a cost is treated in capital budgeting as:
a)
b)
c)
d)
An Inflow,
An Outflow,
Nil,
None of the above.
Ans: a
Q.80). According to DuPont analysis, an increase in the profit margin (all else constant) should:
a)
b)
c)
d)
Ans: a
Q.81). According to DuPont analysis, an increase in asset turnover (all else constant) should:
a) Increase both ROE and ROA.
b) Increase ROE but not ROA.
c) Increase ROA but not ROE.
15
Q.82). According to DuPont analysis, an increase in the equity multiplier (all else constant)
should:
a)
b)
c)
d)
Ans: b
Q.83). The Complete Balanced Scorecard Strategy Map lists perspectives along with sub
items. Identify the correct link for Financial Perspective
a)
b)
c)
d)
Customer solutions
Operations Theme
Strategic Competencies
Productivity Strategy
Ans: d
Q.84). Identify the correct link for Customer Perspective in The Complete Balanced Scorecard
Strategy Map
a)
b)
c)
d)
Product Leader
Innovation Theme
Revenue Growth Strategy
Organization Alignment
Ans: a
Q.85). Internal Perspective is part of the Complete Balanced Scorecard Strategy. This is a
correct sub item for this perspective
a) Regulatory and Society Theme
b) Customer solutions
c) Strategic Technologies
d) Revenue Growth Strategy
Ans: a
Q.86). Learning & Growth Perspective: role for intangible assets -- people, systems, climate
and culture is part of the BSC Strategy. Identify which of the following is a sub item of
Learning & Growth Perspective
a) Improve shareholder value
16
Ans: c
Q.88). The process of evaluating an employees current and/or past performance relative to his
or her performance standards is called _____.
a)
b)
c)
d)
recruitment
employee selection
performance appraisal
organizational development
Ans: c
Q.89). Pitfalls exists the same as with any new technology or management tool. All of the
following describe these pitfalls except
e)
f)
g)
h)
Ans: c
Q.90). Which of the following statements regarding flaws suffered by financial measures is not
correct:
a) They are hard to quantify
b) They do little to motivate employees to improve accounting profits
c) They are not effective in getting managers' attention
d) They are useful in identifying operational problems
Ans: d
Q.91). If return on investment is a measure used on the balanced scorecard, under which
perspective would it be listed
a) Financial perspective
b) Customer perspective
c) Learning and growth perspective
d) Internal business perspective
17
Ans: a
Q.92). Which one of the following is not one of the Balanced Scorecards four generic
perspectives
a)
b)
c)
d)
Ans: d
Q.93). Which one of the following is a lag performance indicator
a)
b)
c)
d)
Ans: b
Q.94). Which one of the following statements is true
a)
b)
c)
d)
Ans: c
Q.95). Which of the following statements is false? Balanced scorecards
a)
b)
c)
d)
Ans: c
Q.96). Which of the following statements is correct:
a) One fundamental idea of balanced scorecards is to increase the number of performance
indicators used to manage the business
b) Balanced scorecards always report using the same time periods as the financial
accounting system
c) The fundamental idea of balanced scorecards is to create corporate strategy
d) Organisations sometimes use a traffic-light system on their balanced scorecard to help
them prioritise their activities
Ans: d
18
Q.97). The following are basic elements in which Continuous Improvement framework
(leadership; planning; service orientation; information and analysis; employees and
workplace climate; process management; excellence levels and trends
a)
b)
c)
d)
Six Sigma
Total Quality Management (TQM)
Zero Defect
Malcolm Baldridge Quality Award
Ans: d
Q.98). The drive in world markets to produce superior goods has led some countries to
recognize or award prizes. What is the name of U.S. prize for developing quality products:
a)
b)
c)
d)
Ans: b
Q.99). When goal setting, performance appraisal, and development are consolidated into a
single, common system designed to ensure that employee performance supports a
companys strategy, it is called _____.
a)
b)
c)
d)
Ans: b
Q.100).
Performance management combines performance appraisal with _____ to
ensure that employee performance is supportive of corporate goals.
a)
b)
c)
d)
Goal setting
Absenteeism
Incentive systems & Goal setting
Strategic management
Ans: c
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