Question 1

The main objective of the balanced scorecard system of performance measurement is achieving the organization's strategic goals.

Accepted Answer

A) True 
 B)False  True

Question 2

Capital turnover is equal to sales divided by average invested capital.

Accepted Answer

A) True 
 B)False  True

Question 3

The primary reason for using a performance measure,such as ROI,is to:

Accepted Answer

A) Motivate organizations to embrace strategic plans that are consistent with employee goals. 
B) Motivate the CEO and CFO to maintain their stock holdings in the company. 
C) Motivate employees to make decisions consistent with goals and objectives of the organization. 
D) Motivate employees to hold stock in the company for long-term periods. 
A) Motivate organizations to embrace strategic plans that are consistent with employee goals. 
B) Motivate the CEO and CFO to maintain their stock holdings in the company. 
C) Motivate employees to make decisions consistent with goals and objectives of the organization. 
D) Motivate employees to hold stock in the company for long-term periods. C

Question 4

[The following information applies to the questions displayed below.]
Division Y of the Mortisen Company produces and sells two products.Each product's operating income and average capital resources are shown below:
Product A: Operating Income $500,000;Average capital $5,000,000.
Product B: Operating Income $350,000;Average capital $4,100,000.
-What is division Y's ROI for product B? (Round your percentage answer to the nearest whole number. )

Accepted Answer

A) 12.0% 
B) 10.0% 
C) 9.0% 
D) 13.0% 
A) 12.0% 
B) 10.0% 
C) 9.0% 
D) 13.0%

Question 5

Listed below are eight accounting terms introduced or emphasized in this chapter:   Each of the following statements may (or may not)describe one of these technical terms.In the space provided,indicate the accounting term described,or answer "none" if the statement does not correctly describe any of the terms.
(a)________ is the amount by which operating earnings exceeds a minimum acceptable return on the average invested capital.The minimum rate of return represents the opportunity cost of using the invested capital.
(b)________ is the operating income divided by the average invested capital associated with the generation of that income.
(c)________ is computed by dividing the operating income by the total sales for a particular business segment or product line.It tells managers the amount of earnings generated from a dollar of sales.
(d)________ give an employee the right to purchase a pre-specified number of shares at a pre-specified price within a certain future time period.They provide incentives for managers to increase stock prices.
(e)________ is the set of activities necessary to create and distribute a desirable product or service to a customer.
(f)________ is a specific type of residual income.It is computed by multiplying weighted average cost of capital by total assets minus current liabilities,and subtracting that product from the after-tax operating income.
(g)________ is a measure created by dividing sales by the average invested capital to generate those sales.It tells managers the amount of sales generated by a dollar of invested capital.
(h)________ is a system for performance measurement that links a company's strategy to specific goals,assesses progress towards those goals,and measures specific initiatives to achieve those goals.It is a systematic attempt to create a business performance measurement process that integrates objectives across four business lenses to achieve the organization's strategic goals.

Accepted Answer

(a)Residual income (b)Return o

Question 6

[The following information applies to the questions displayed below.]
The following information regarding Mahen,Inc.is available:
  
-What is the capital turnover for Mahen,Inc.?

Accepted Answer

A) 166% 
B) 5% 
C) 10% 
D) 60% 
A) 166% 
B) 5% 
C) 10% 
D) 60%

Question 7

Which of the following is not a measure used by the financial perspective lens of the balanced scorecard?

Accepted Answer

A) ROI 
B) EVA 
C) Residual income 
D) Net operating income 
A) ROI 
B) EVA 
C) Residual income 
D) Net operating income

Question 8

The Lastrom Company provided the following information regarding its operations:   What is Lastrom's ROI for the year ending 2018?

Accepted Answer

A) 2.48% 
B) 2.72% 
C) 2.40% 
D) 2.50% 
A) 2.48% 
B) 2.72% 
C) 2.40% 
D) 2.50%

Question 9

Explain the importance of incentive systems for motivating performance.

Accepted Answer

Employees may have goals and objectives

Question 10

How is the balanced scorecard used to identify,evaluate,and reward business performance?

Accepted Answer

The balanced scorecard uses four lenses

Question 11

A system that considers the earnings per sales dollar and the investment used to generate those sales dollars is called:

Accepted Answer

A) The economic value added system. 
B) The balanced scorecard system. 
C) The DuPont system. 
D) The residual income system. 
A) The economic value added system. 
B) The balanced scorecard system. 
C) The DuPont system. 
D) The residual income system.

Question 12

A stock option is a right to sell a certain number of shares at a specific price sometime in the future.

Accepted Answer

A) True 
 B)False

Question 13

Accounting systems do not offer any benefit to management in generating and focusing employee motivation.

Accepted Answer

A) True 
 B)False

Question 14

Capital turnover is calculated by dividing operating income by average invested capital.

Accepted Answer

A) True 
 B)False

Question 15

Calculate and explain residual income and economic value added.

Accepted Answer

Residual income is the amount by which o

Question 16

Which of the following statements is most correct about Return on Investment,Economic Value Added,and Residual Income?

Accepted Answer

A) ROI was developed in response to criticisms levied against EVA. 
B) RI is a refinement of the EVA measure. 
C) ROI is a refinement of the RI measure. 
D) EVA and RI were developed in response to criticisms levied against ROI. 
A) ROI was developed in response to criticisms levied against EVA. 
B) RI is a refinement of the EVA measure. 
C) ROI is a refinement of the RI measure. 
D) EVA and RI were developed in response to criticisms levied against ROI.

Question 17

Residual income is the difference between net operating income at breakeven and actual net operating income.

Accepted Answer

A) True 
 B)False

Question 18

Return on investment indicates the profitability that can be expected from one dollar of sales.

Accepted Answer

A) True 
 B)False

Question 19

The following information is available for the Hancock Company.
   Compute the answers for items A-D.

Accepted Answer

(A)$189,00

Question 20

Operating earnings rather than net income is used to compute return on sales.

Accepted Answer

A) True 
 B)False

Exam 25: Rewarding Business Performance

The main objective of the balanced scorecard system of performance measurement is achieving the organization's strategic goals.

Capital turnover is equal to sales divided by average invested capital.

The primary reason for using a performance measure,such as ROI,is to:

[The following information applies to the questions displayed below.] The following information regarding Mahen,Inc.is available: -What is the capital turnover for Mahen,Inc.?

Which of the following is not a measure used by the financial perspective lens of the balanced scorecard?

The Lastrom Company provided the following information regarding its operations: What is Lastrom's ROI for the year ending 2018?

Explain the importance of incentive systems for motivating performance.

How is the balanced scorecard used to identify,evaluate,and reward business performance?

A system that considers the earnings per sales dollar and the investment used to generate those sales dollars is called:

A stock option is a right to sell a certain number of shares at a specific price sometime in the future.

Accounting systems do not offer any benefit to management in generating and focusing employee motivation.

Capital turnover is calculated by dividing operating income by average invested capital.

Calculate and explain residual income and economic value added.

Which of the following statements is most correct about Return on Investment,Economic Value Added,and Residual Income?

Residual income is the difference between net operating income at breakeven and actual net operating income.

Return on investment indicates the profitability that can be expected from one dollar of sales.

The following information is available for the Hancock Company. Compute the answers for items A-D.

Operating earnings rather than net income is used to compute return on sales.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Capital Budgeting

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters