Exam 15: Essentials of Control

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The executive team at Midas Muffler and Brake decides to publish a statement of its available cash that subtracts from the cash, the planned investments in new shops and new technology. The statement can best be labeled a measure of

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Positive approaches to cost cutting include

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An important use of activity-based costing is to estimate the

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A key advantage of external controls is that they help build commitment to the firm.

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The financial ratio, revenue per employee is often used as a(n)

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Cash flow analysis is well accepted because it provides a more accurate picture of financial health than sales volume.

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The basic purpose of measuring cash flow is to estimate how much

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Intellectual capital is a measure of the money invested in equipment that is used for working with ideas such as computers and WiFi.

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The EVA (economic value added) is a rough index of how much managers are paid in comparison to their contribution to the firm.

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A cost-effective control system

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Jim and Peggy own an income-tax service and are planning to purchase a $35,000 computer system including software. The proposed expenditure should be allocated to their capital-expenditure budget.

(True/False)
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Internal control strategy is based on the belief that employees can be motivated by building their commitment to organizational goals.

(True/False)
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José owns a custom motorcycle business. He borrowed $150,000 to set up shop and still owes $100,000. José claims that a true measure of his indebtedness is only $50,000 because he has $50,000 cash on hand that he could use to pay debt in an emergency, thereby making use of the financial measure called net debt.

(True/False)
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Under a balanced scorecard system, compensation is based on

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Information systems are widely used for computer-aided monitoring of work.

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Computer-aided monitoring of work raises concerns about

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Describe the measurement of intellectual capital.

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A recommended approach to cost cutting is to squeeze hard the expenditures of everybody but the top management team.

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The financial measure, free cash flow takes into account the idea that managers need to make capital investments to maintain or expand the company's fixed assets.

(True/False)
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Electronic monitoring often contributes to low levels of job satisfaction, absenteeism, high turnover, and job stress.

(True/False)
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