Horngren’s Cost Accounting A Managerial Emphasis 17th Global Edition by Srikant M. Datar test bank
16) One of the steps in planning is evaluating the performance and taking corrective measures.
Answer: FALSE
Explanation: Evaluating the performance and taking corrective measures is a benefit to installing a budgeting system. This is not one of the steps in planning, but a guideline for management..
Diff: 2
Objective: 4
AACSB: Analytical thinking
17) A budget helps to control activities by adhering to the prescribed plan.
Answer: TRUE
Diff: 1
Objective: 4
AACSB: Analytical thinking
18) To take advantage of changing market opportunities, the annual budget should be strictly enforced.
Answer: FALSE
Explanation: To take advantage of changing market opportunities, the annual budget should be updated to reflect those changes.
Diff: 2
Objective: 4
AACSB: Analytical thinking
19) A budget is a qualitative expression of a plan.
Answer: FALSE
Explanation: Explanation: A budget is a quantitative expression of a plan.
Diff: 1
Objective: 4
AACSB: Analytical thinking
20) The process of preparing a budget encourages coordination and communication throughout the company.
Answer: TRUE
Diff: 1
Objective: 4
AACSB: Analytical thinking
21) Linking rewards to performance helps motivate managers and leads to good management performance.
Answer: TRUE
Diff: 1
Objective: 4
AACSB: Analytical thinking
22) Control comprises taking actions that implement the planning decisions, evaluating past performance, and providing feedback and learning to help future decision making.
Answer: TRUE
Diff: 1
Objective: 4
AACSB: Analytical thinking
23) A budget can only be used as a planning tool.
Answer: FALSE
Explanation: A budget may be used as a planning tool and also as a control tool.
Diff: 1
Objective: 4
AACSB: Analytical thinking
24) Gathering information before making a decision is not efficient within the decision-making process.
Answer: FALSE
Explanation: Gathering information before making a decision helps managers gain a better understanding of uncertainties.
Diff: 1
Objective: 4
AACSB: Analytical thinking
25) Evaluating actual performance, receiving feedback and learning from that feedback helps in the future decision-making process.
Answer: TRUE
Diff: 1
Objective: 4
AACSB: Analytical thinking
26) Bonuses given to employees based on performance is an example of extrinsic reward.
Answer: TRUE
Diff: 2
Objective: 4
AACSB: Application of knowledge
27) A budget is a benchmark against which actual performance can be compared.
Answer: TRUE
Diff: 2
Objective: 4
AACSB: Analytical thinking
28) A performance report compares actual performance to the amount budgeted.
Answer: TRUE
Diff: 1
Objective: 4
AACSB: Analytical thinking
29) Management accounting is playing an increasingly important role by helping managers develop and implement strategy.
Answer: TRUE
Diff: 1
Objective: 4
AACSB: Analytical thinking
30) In order, list the five steps in the decision-making process.
Answer:
1. Identify the problem and uncertainties
2. Obtain information
3. Make predictions about the future
4. Make decisions by choosing among alternatives
5. Implement the decision, evaluate performance, and learn
Diff: 2
Objective: 4
AACSB: Analytical thinking
31) For each type of report listed below, identify one planning decision and one controlling decision for which the information would be helpful. Assume you are a Walgreen Company store.
Item:
a. annual financial statements for the past three years
b. report detailing sales by department by each hour of the day for the past week
c. special study regarding increased road traffic due to the construction of a new shopping mall at a near-by intersection
Answer: Please note that answers will vary, but may include the following:
a. Planning: Decision by shareholder about whether to purchase more stock in the company.
Control: Decision by bank to determine if financial ratios maintained in the line-of-credit (LOC) agreement warrant increasing the LOC amount.