Chapter 25 Accounting

Accounting information systems are used to align employees' goals with organizational goals and to provide _____ and _____ that guide employees in using resources effectively.
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A division of Davis Corporation measures return on investment (ROI) in terms of the asset base over which management has responsibility. In the current period, the division reported operating income of $2.4 million and net income of $1.6 million. The division's average total assets for the period were $10 million, and its average stockholders' equity was $8 million. What was the division's ROI?
Price Corporation measures return on investment (ROI) in terms of the asset base over which management has responsibility. Of the company's 2 product lines, Product A has an ROI of 6%, and Product B has an ROI of 4%. Assets for both product lines are financed with a bank loan, whose $2 million principal accrued interest expense of $160,000 in the current period. Given this information, which of the following statements is true?the ROI of neither Product A nor Product B is adequate to repay the interest on the company's bank loan.The two components of ROI developed by DuPont are _____ _____ and _____ on _____-capital -turnover -return -sales.Division managers whose rewards are based solely on ROI may make decisions to (increase/decrease) _____ profits and (increase/decrease) _____ their division's capital in ways that are inconsistent with the best interests of the overall organization.-increase -decreaseA major common criticism of ROI, RI, and EVA as performance measures is that they focus too heavily upon _____ outcomes.financialThe balanced scorecard includes perspectives that integrate organizational objectives across the span of thevalue chainTwo performance measures created in response to criticisms of ROI are _____ income and _____ _____ added.-residual -economic -valueMeasures of the balanced scorecard's financial perspective may include-return on investment -economic value added. -return on sales. -residual incomeSales returns and market share are two examples of the Balanced Scorecard's _____ perspective.customerReturn on sales indicates the operating earnings or profitability that can be expected from one dollar of sales.trueMeasures of the balanced scorecard's business process perspective may include-cycle time -standard cost variances.True or false: A common major concern of ROI, RI, and EVA is that they concentrate on production performance.falseEmployee satisfaction, employee turnover, and the number of hours invested in employee training are examples of the Balanced Scorecard's _____ and _____ perspective-learning -growththe _____ _____ is a performance measurement system that links a company's _____ to specific goals and objectives.-balanced -scorecard -strategyROI, EVA, and net income are examples of the Balanced Scorecard's _____ perspective.financialMeasures of the balanced scorecard's customer perspective may include-product returns -market share growth -customer satisfaction -customer retentionDowntime, warranty claims, and on-time delivery performance are examples of the Balanced Scorecard's _____ _____ perspective.-business -processMeasures of the balanced scorecard's learning and growth perspective may include-employee turnover. -patents developed -hours of training offeredThe four perspectives encompassed by the balanced scorecard are-a customer perspective. -a business process perspective. -the financial perspective. -a learning and growth perspective.Organizations can avoid some of the difficulties associated with the balanced scorecard by-limiting the number of measures used in each perspective. -identifying measures with the highest potential impact on achieving strategic goals. -choosing performance measures with the strongest cause and effect linkages.Which of the following is an example of the Balanced Scorecard's financial perspective?ROIWhich of the following is an example that enables assessment of the quality of internal processes in the business process perspective lens?number of defectsNearly all managers are paid either a(n) _____ salary or a fixed _____ wage rate.-fixed -hourlyWhich of the following is an example of the Balanced Scorecard's learning and growth perspective?Employee turnover.One argument against stock-based compensation plans is that they create too much _____ for managers. As such, such plans might motivate managers to be overly risk- _____ in their decision making.-risk -averseCommon difficulties associated with the balanced scorecard include-assigning weights of importance to the balanced scorecard's perspective. -coping with a lack of clarity associated with the balanced scorecard's multiple performance measures. -measuring, quantifying, and evaluating the qualitative aspects of the balanced scorecard. -justifying the time and expense of implementing the balanced scorecard approach.Most employee incentive plans are based upon _____ information prepared in compliance with _____ reporting standards. As such, should U.S. GAAP converge with or adopt _____ , many companies would be forced to restructure their management incentive contracts.-accounting -external -IFRSIn contrast to a fixed salary, _____ are typically awarded for meeting or achieving specific goals.bonusesA(n) _____ incentive plan motivates employees to work together in the best interest of the organization as a whole, whereas a(n) _____ incentive plan motivates employees to outperform their coworkers.-cooperative -competitiveConvergence with or adoption of IFRS will ultimately require companies to restructure their management _____ contracts.incentive