Answered: Challenging but highly achievable…

Challenging but highly achievable budgets increase the likelihood that lower-level managers will engage in undesirable behavior to secure their desired compensation. O True O False

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 8EB: Though a high ROI is desired, what are some reasons that might lead to a low or decreased ROI?

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Challenging but highly achievable budgets increase the likelihood that lower-level managers will engage in undesirable behavior to secure their desired
compensation.
O True
O False

Definition Definition Structural system an enterprise uses to collect, store, report, retrieve, and process financial data. Accounting information systems are used by business analysts, auditors, accountants, and consultants for accurate and efficient access to financial data.

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Which of the following is not an advantage of participative budgeting?a. It encourages budgetary slack.b. It tends to lead to a higher level of performance.c. It fosters a sense of responsibility.d. It encourages greater goal congruence.e. It fosters a sense of creativity in managers.
Briefly describe the type of human behavior problems that might arise if budget goals are set too tightly.
True or False 1. Budgets should not be used to motivate and reward employees. 2. Budgets play an important communication role within organizations. They provide a mechanism for managers to share expectations and priorities for the future. 3. Budgets also provide useful benchmarks for evaluating and rewarding employee performance.
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Which of the following statements are TRUE? I. Responsibility accounting attempts to assign blame for problems to a specific manager.II. One benefit of a budget is that it helps managers gather relevant information for improving future performance.III. Challenging budgets tend to motivate improved performance.IV. Controllability may be difficult to pinpoint because some costs are the result of the market, not the manager.
Which of the following is not a benefit of budgeting? O Provide a way to measure business performance Help managers communicate expectations and quickly. spot deviations Keep managers focussed on financial implications of their business decisions O Provide a way to hire specialized labors
Which of the following statements are TRUE? 1. Responsibility accounting attempts to assign blame for problems to a specific manager. 11. One benefit of a budget is that it helps managers gather relevant information for improving future performance. III. Challenging budgets tend to motivate improved performance. IV. Controllability may be difficult to pinpoint because some costs are the result of the market, not the manager. a) I, III, and IV are true. b) I and IV are true c) II, III, and IV aregrue. d) All statements are true
None
4. The following are characteristics of an effective budget, EXCEPT: A. Goals should be attainable. В. Evaluations should be made carefully with opportunities to explain any failures. С. They should be properly applied to avoid negative effects. D. Customers affected by a budget should be consulted when it is prepared.
Top-down budgeting is preferred to a bottom-up approach, especially to monitor controllable costs. True False
How can an organization help to reduce the problems caused by budgetary slack?
Criticisms of return on investment as the only performancemeasure include:a. ROI focuses on short-term decisions.b. ROI is focused on only one component of the value chain.c. Managers evaluated based only on ROI are sometimesmotivated not to make an investment that is in the bestinterest of the organization as a whole.d. All of the above.