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Garrison (Asian Edition) Practice Exam Chapter 1

Print these pages. Answer each of the following questions, explaining your answers or showing your work, as appropriate, and then compare your solutions to those provided at the end of the practice exam. 1. Match each of the following terms with its definition. Constraint Corporate governance Decentralization Enterprise risk management Lean thinking model a. Corporate governance The system by which a company is directed and controlled; if properly implemented, it should provide incentives for top management to pursue objectives that are in the interests of the company and effectively monitor performance. b. Constraint Anything that prevents an organization or individual from getting more of what it wants. c. Lean thinking model A five-step management approach that organizes resources around the flow of business processes. d. Enterprise risk management A process used by a company to help identify the risks that it faces and to develop responses to those risks that enable the company to be reasonably assured of meeting its goals. e. Decentralization The delegation of decision-making authority throughout an organization by providing managers with the authority to make decisions relating to their area of responsibility. 2. Indicate beside each statement below whether it is True (T) or False (F): __F__ a. Informal as well as formal relationships within an organization are usually depicted on an organization chart. __F__ b. If an organization delegates decision making authority throughout the organization, it is said to be a centralized organization. __T__ c. Persons who directly make decisions are said to have line positions, while persons indirectly providing support toward the organizations objectives are in staff positions. __T__ d. In todays organizations, the CFO (Chief Financial Officer) is often a key person in top management whose role is considered critical in providing accounting and financial leadership and information for the organization.

__T__ e. The CFO may have both the accounting (controller) and the treasury/cash functions reporting to him or her.

3. For each of the following, indicate whether the description most closely relates to the concepts of Lean Thinking Model (LTM), Six Sigma (SS), or the Theory of Constraints (TOC): (LTM) A method one might describe as often trying to improve (rather than remove) the weakest link Common framework is known as DMAIC, which stands for Define, Measure, Analyze, Improve, and Control Five-step management approach that organizes resources around the flow of business processes Management approach that emphasizes the importance of managing constraints Management of bottlenecks which might delay or stop progress Minimizes inventories Pulls units through the business processes in response to customer orders Process improvement method that relies on customer feedback and fact-based data gathering and analysis techniques to drive process improvement Strives to continuously pursue perfection in the business process (SS) (TOC)

X X X X X X X X X

4. Indicate beside each statement below whether it is True (T) or False (F): __F__ a. It isnt really important that accountants behave ethically since what they do will always be specifically bound by accounting rules such as GAAP. __T__ b. Many accounting professional organizations, such as the IMA and the AICPA have standards of ethical behavior their members should follow. __T__ c. Being ethical and making ethical choices is part of the integrity of a persons character, which can be very important to CEOs hiring CFOs. __T__ d. The IMA Code of Conduct consists of two major parts: general ethical guidelines and specific guidance for unethical situations.