Chapter 14
Managerial Control
True / False Questions
1. Effective managers make sure that activities are going as planned with the help of control.
True False
2. During challenging economic times when resources are limited and budgets need to be stretched,
managerial control becomes insignificant for survival.
True False
3. The lack of controls can frequently cause irreparable damage to organizations.
True False
4. Some means of control are necessary because once managers form plans and strategies, they
must ensure that the plans are carried out.
True False
5. Control systems lay out a framework for the future, and, in this sense, provide a blueprint for
control.
True False
,6. Control systems detect and correct significant variations, or discrepancies, in the results of planned
activities.
True False
7. The downside of establishing performance targets and standards is that they may not be
supported by other elements of the control system.
True False
8. With the principle of exception, the manager is concerned with performance that equals or closely
approximates the expected results.
True False
9. In feedforward control, a manager waits for results and compares them with goals.
True False
10. When supervisors monitor behavior, they are exercising feedback control.
True False
11. Six sigma companies have a high level of product or service defects.
True False
12. External audits provide essential feedback control when they identify legal and ethical lapses that
could harm the organization and its reputation.
True False
,13. Budgetary control is the process of finding out what’s being done and comparing the results with
the corresponding budget data to verify accomplishments or remedy differences.
True False
14. Budgeting information is confined to finances.
True False
15. The chief financial officer (CFO) needs to be more concerned with details than with recommending
adjustments when needed.
True False
16. The cash budget should be prepared before all other budget estimates are completed.
True False
17. Traditional methods of cost accounting are still appropriate in today’s business environment.
True False
18. The activity-based costing method allocates costs across business processes and provides a more
accurate picture of how costs should be charged to products and services.
True False
19. Summarizing balance sheet items over a long period of time uncovers important trends.
True False
, 20. Controlling by profit and loss is most commonly used for the entire enterprise.
True False
21. An effective approach for checking an enterprise’s overall performance is to use key financial
ratios.
True False
22. Relying exclusively on financial ratios is effective because they provide performance standards and
indicators of what has occurred.
True False
23. Comprehensive control systems increase the accuracy of performance data and make employees
more accountable for their actions.
True False
24. Control systems help create comfortable, cooperative relationships among employees.
True False
25. The most effective standards tend to be subjective rather than objective.
True False
26. Allowing people to initiate their own corrective action encourages self-control and reduces the
need for outside supervision.
True False
Managerial Control
True / False Questions
1. Effective managers make sure that activities are going as planned with the help of control.
True False
2. During challenging economic times when resources are limited and budgets need to be stretched,
managerial control becomes insignificant for survival.
True False
3. The lack of controls can frequently cause irreparable damage to organizations.
True False
4. Some means of control are necessary because once managers form plans and strategies, they
must ensure that the plans are carried out.
True False
5. Control systems lay out a framework for the future, and, in this sense, provide a blueprint for
control.
True False
,6. Control systems detect and correct significant variations, or discrepancies, in the results of planned
activities.
True False
7. The downside of establishing performance targets and standards is that they may not be
supported by other elements of the control system.
True False
8. With the principle of exception, the manager is concerned with performance that equals or closely
approximates the expected results.
True False
9. In feedforward control, a manager waits for results and compares them with goals.
True False
10. When supervisors monitor behavior, they are exercising feedback control.
True False
11. Six sigma companies have a high level of product or service defects.
True False
12. External audits provide essential feedback control when they identify legal and ethical lapses that
could harm the organization and its reputation.
True False
,13. Budgetary control is the process of finding out what’s being done and comparing the results with
the corresponding budget data to verify accomplishments or remedy differences.
True False
14. Budgeting information is confined to finances.
True False
15. The chief financial officer (CFO) needs to be more concerned with details than with recommending
adjustments when needed.
True False
16. The cash budget should be prepared before all other budget estimates are completed.
True False
17. Traditional methods of cost accounting are still appropriate in today’s business environment.
True False
18. The activity-based costing method allocates costs across business processes and provides a more
accurate picture of how costs should be charged to products and services.
True False
19. Summarizing balance sheet items over a long period of time uncovers important trends.
True False
, 20. Controlling by profit and loss is most commonly used for the entire enterprise.
True False
21. An effective approach for checking an enterprise’s overall performance is to use key financial
ratios.
True False
22. Relying exclusively on financial ratios is effective because they provide performance standards and
indicators of what has occurred.
True False
23. Comprehensive control systems increase the accuracy of performance data and make employees
more accountable for their actions.
True False
24. Control systems help create comfortable, cooperative relationships among employees.
True False
25. The most effective standards tend to be subjective rather than objective.
True False
26. Allowing people to initiate their own corrective action encourages self-control and reduces the
need for outside supervision.
True False
