Modern Education Society’s
Neville Wadia Institute of Management Studies and Research, Pune - 411001
MBA-II SEM-IV
Enterprise Performance Management MCQs
Question
A
B
C
D
ANSWER
Capital Budgeting Decisions are:
Irreversible
for short term
involves small
amount
B
Which of the following is not incorporated
in Capital Budgeting?
Time Value of
Money
Required Rate of
Return
Rate of Cash
Discount
D
PERT / CPM have to be used for proper
……………….. of all projects
controlling
staffing
coordinating
B
BSC is important for ………
controlling strategy
evaluating the
performance of a
strategy
mapping strategy
C
Classification of responsibility center is
based on the nature of the monetary
……………
Inputs and outputs
Inputs only
Outputs only
A
Discretionary expenses are expenses
………
that do not hamper
the operations
immediately
that are completely
unnecessary
that are necessary
B
For the board of directors of the
company, the entire company is a
……………….
Expense center
Responsibility
center
Investment center
C
In a revenue center the primary
measurement is ………………….
Input in cost terms
Revenue
Cost incurred by
center
C
In case of discretionary expense center,
the financial center is primarily exercised
at ………. Stage.
Quality control
Output
Planning
D
In case of revenue center the output is
measured in ……………. terms, but no
formal attempt is made to relate
……………….
Monetary,
efficiency and
effectiveness
Monetary, input and
output
Monetary, output only
C
In financial performance measurement
most important is ……………
ROI
Profit Margin
MVA
A
Performance management is …………….
Re-engineering
tool
Business process
Strategic
management tool
C
Profit centre profit is calculated ……....
after debiting
corporate
overheads
without considering
corporate
overheads
along with corporate
overhead
B
A major part of strategy implementation is
…….
Communication
Resource allocation
Monitoring
C
The Enterprise Performance Management
core processes does not include which of
the following?
Operational
Planning
Business Analytics
Consolidation and
Reporting
C
The Malcolm Baldrige Award is awarded
by the Government of ……….
Russia
U.K.
U.S.A.
D
The responsibility center whose inputs
are measured in monetary terms, but
whose output is not, is ………………..
Expense center
Profit center
Investment center
B
Two step transfer prices depend on
……………….
profit requirement
corporate profit
requirement
SBU profit
requirement
C
Which of the following does not belong to
the category of quantitative performance
indicators?
Proportion of
Levels of
Amount of
C
Which of the following is correct? ROI =
Revenue / Asset
employed
Cost / Revenue
Profit / No. of shares
outstanding
A
Which of the following is not a financial
performance measure?
Return on assets
Market Cap
Market share/growth
D
Which of the following is not an entity
with reference to Baldrige Criteria /
Framework?
Customer Focus
Operations Focus
Work Force Focus
A
The selective and analytical approach to
control investment in various types of
inventories is known as
……………………………
Gross Margin
Return on
Investment
(GMROI)
Multiple Attribute
Method
Sell Through Analysis
A
The Sell Through Analysis is not about
………………………
Inventory/ Sales
Turn Over
Sales Velocity
Merchandise
Management
A
The Non-profit Organization focus more
on ………..
Surplus generation
Funds mobilization
Governance
A
The time the activity would take if things
did not go well is known as
_______________
Most likely time
Optimistic time
Average time
A
Which of the following is responsible for
establishing a private company’s internal
control?
Auditors
Management and
auditors
Committee of
Sponsoring
Organizations
A
A responsibility center in which the
manager is held accountable for the
profitable use of assets and capital is
commonly known as a(n)
Revenue center
Profit center
Investment center
D
In the balanced scorecard approach
quality would come under which
perspective?
The customer
perspective
The financial
perspective
The innovation and
learning perspective
A
Performance management is believed to
have originated from which country?
France
Denmark
USA
D
The overall purpose of the balanced
scorecard approach is to:
Benchmark against
competitors
Measure financial
performance
Measure product
quality
A
The process of evaluating an employee’s
current and/or past performance relative
to his or her performance standards is
called
employee selection
performance
appraisal
organizational
development
C
The term 'EVA' is used for:
Economic Value
Added
Expected Value
Analysis
Engineering Value
Analysis
B
The U.S. National Quality Award is named
after
Genichi Taguchi
W. Edwards
Deming
Malcolm Baldrige
D
Which of the following statements is
false? Balanced scorecards
Can be cascaded to
different
levels/parts of
organisations
Cannot be used in
conjunction with
budgetary control
systems
Can be used to
produce strategy
maps
C
Which of the following statements
regarding flaws suffered by financial
measures is not correct:
They do little to
motivate
employees to
improve
accounting profits
They are not
effective in getting
managers'
attention
They are useful in
identifying
operational problems
D
Which of the following variable does ROI
examine?
EVA
ROI
DuPont chart
B
A sound Capital Budgeting technique is
based on:
Accounting Profit
Interest Rate on
Borrowings
Last Dividend Paid
A
Capital Budgeting deals with:
Short-term
Decisions
Both (a) and (b)
Neither a) nor (b)
A
Capital Budgeting Decisions are based
on:
Incremental Cash
Flows
Incremental Assets,
Incremental Capital.
B
Capital Budgeting is a part of:
Working Capital
Management
Marketing
Management
Capital Structure
A
Which of the following is not applied in
capital budgeting?
All costs and
benefits are
measured on cash
basis
All accrued costs
and revenues be
incorporated
All benefits are
measured on after-tax
basis
C
Which of the following is not followed in
capital budgeting?
Interest Exclusion
Principle
Accrual Principle
Post-tax Principle
C
Which of the following is not true for
capital budgeting?
Opportunity costs
are excluded
Incremental cash
flows are
considered
Relevant cash flows
are considered
B
Which of the following is not used in
Capital Budgeting?
Sensitivity Analysis
Net Assets Method
Cash Flows
B
Which one is the Capital Expenditure?
Selling expense for
machine
Machine purchased
Daily expenses to
operate business
C
Who among the following have the
authority to inspect the books of
accounts?
Members
Officer of Sebi
Both (a) and (c)
D
Under responsibility accounting, the
evaluation of a manager’s performance is
based on matters that the manager:
Directly and
indirectly controls
Indirectly controls
Has shared
responsibility for with
another manager
A
Return on Assets and Return on
Investment Ratios belong to:
Profitability Ratios
Solvency Ratios
Turnover
B
………….. costs are not easily changed
and are often fixed, for ex, once a
company has decided to rent a place.
Discretionary
Engineered
Marginal
A
Management by objective is the process
in which
Budgeteer
proposes to
accomplish specific
jobs and prepares
budget for it.
A manager decides
his own area of
operations and
prepares budget for
it.
Budget is not
prepared at all.
B
Return on Assets (ROA) ratio is given by
which of the following?
Sales / Total
Assets
Net Income/ Total
Assets
Gross Margin/ Net
Sales
C
The Strategic Business Unit evolved
during the ………………………
1990s
1960s
21st Century
A
The strategic Business Unit evolved from
…………………
Function based
structure of
organization
Territorial structure
of organization
Divisional structure of
organization
D
There are four elements of Anthony’s
model. Which one does not belong to the
group?
Assessor
Effecter
Rejecter
D
Total control over discretionary expense
center is achieved primarily through
……… performance measures.
Non-financial
Objective based
Output based
B
Which of the following areas is not
covered under the Baldrige Award?
Health Care
Small Business
Multi National
Corporation (MNC)
D
Which of the following is an example of
lead indication?
Net profit
Gross margin
ROI
A
If project A has a lower payback period
than project B, this may indicate that
project A may have a …………….
Higher NPV and be
less profitable
Higher NPV and be
more profitable
Lower NPV and be
more profitable
C
The primary capital budgeting method
that uses discounted cash flow
techniques is the ……....
Cash payback
technique
Annual rate of
return method
Profitability index
method
A
Which of the following ignores the time
value of money?
Profitability Index
Net present value
Cash payback
D
Which of the following is not true? Asset
employed is equal to
Total assets –
current liabilities
Non-current assets
+ working capital
Shareholder’s equity
–current liabilities
D
As asset becomes Non Performing after
default of ……………………
60 days
90 days
91 days
C
As per the RBI guidelines banks have to
make sure that out of their loan assets
___________ loans are given to Priority
Sector.
40%
50%
45%
B
The capital adequacy ratio to be
maintained by public sector banks in
India is ……………....
10%
10.5%
12%
D
The Retailer is selling the merchandise for
more than it costs the Retailer to acquire
it, then the GMROI Ratio would be
……………………
Equal to 1
Less than 1
Equal to 3.2
A
Which of the following do not fall under
Financial inclusion ?
Public Sector
Lending targets
Zero Balance
Accounts
Education at
affordable cost
D
While calculating the Gross Margin Ratio
on Investment (GMROI), the TWO
important aspects are:
Gross Margin and
Average Inventory
Cost
Gross Revenue and
Stock on Hand
Carrying Costs and
Stock-Out Costs
B
Assembling project team and assigning
their responsibilities are done during
which phase of project management?
Project Initiation
Project Controlling
Project Execution
B
PERT is the
Event oriented
technique
Activity oriented
technique
Target oriented
technique
B
Which of the following is not one of the
eight specific principles of Social Audit?
Comparative
Multi-directional
Non-Participatory
D
Which of the following statement about
NPOs is not true?
The NPOs receive
‘Contributed
Capital’ and have
no shareholders
The sources of
funds for NPOs are
more or less
captive
The NPOs are
subjected to Market
Mechanism
D
Which is not a primary objective of audit?
Examining the
System of internal
check
Verifying the
authenticity and
validity of
transactions
Confirming the
existence and value
of assets and
liabilities
A
Which of the following area is not covered
by management audit?
Board’s / Directors
Analysis
Research and
development
New product
development cycle
time
D
Which of the following area is specially
covered by Management Audit?
Cost-Benefit
Analysis
Social Cost-Benefit
Analysis
Sensitivity Analysis
A
Assuming that it is not the first
appointment of the auditor, who is
responsible for the appointment of the
auditor?
The Managing
director
The board of
directors in board
meeting
The audit committee
A
A Balanced Scorecard helps the
organisation to:
Be focus on all the
relevant business
perspectives
Integrate strategy
and key challenges
Communicate better
with staff
B
A cost center manager
May be involved
with the sale of
new marketing
programs to
clients.
Would normally be
held accountable
for producing an
adequate return on
invested capital.
Often oversees
divisional operations
A
According to DuPont analysis, increase in
the profit margin (all else constant)
should
Increase ROE but
not ROA
Increase ROA but
not ROE
Increase neither ROA
nor ROE
A
DU PONT Analysis deals with
Analysis of Profit
Capital Budgeting
Analysis of Fixed
Assets
B
If return on investment is a measure used
on the balanced scorecard, under which
perspective would it be listed
Customer
perspective
Learning and
growth perspective
Internal business
perspective
A
Pitfalls exists the same as with any new
technology or management tool. All of the
following describe these pitfalls except
Some companies
include too many
measures
A poor scorecard is
the biggest threat
and one of the
dangerous pitfalls
Some companies do
not know how to
implement the
effective drivers of
performance
C
Responsibility centers include
Call centers
Exam centers
Profit center
D
Responsibility reports for cost centers
Use static budget
data
Include both
controllable and
non-controllable
costs
Include only
controllable costs
D
Return on Assets and Return on
Investment Ratios belong to:
Profitability Ratios
Solvency Ratios
Turnover
B
Return on Investment may be improved by
one of these
increasing
Expenses
decreasing Capital
Utilization
over budgeting
A
ROI can be viewed as a function of the net
profit margin times
EAT.
The total asset
turnover
Equity multiplier
C
The Balanced Scorecard approach has
been criticized for leaving out certain
measures. One of these is:
Employee
satisfaction
measures
Customer
satisfaction
measures
Technological
innovation measures
B
The drive in world markets to produce
superior goods has led some countries to
recognize or award prizes. What is the
name of U.S. prize for developing quality
products:
Malcolm Baldridge
National Quality
Award
the J.D. Power
Award
the K.C. Irving Quality
Award
B
The following are basic elements in which
Continuous Improvement framework
(leadership; planning; service orientation;
information and analysis; employees and
workplace climate; process management;
excellence levels and trends
Total Quality
Management
(TQM)
Zero Defect
Malcolm Baldridge
Quality Award
D
What is a measure of operating
performance that indicates how
successful the firm has been at
increasing its MVA in a given year.
After-tax cash flow
(ATCF)
Earnings after taxes
(EAT)
Market value added
(MVA)
A
What is not included in a firm’s
expenses?
Depreciation
Interest expense
Dividends
D
What is the term used to describe the
value assigned to the goods or services
sold or rented from one unit of an
organization to another
Fixed cost
Transfer price
Full service cost
C
When managers of subunits throughout
an organization strive to achieve the
goals set by top management, the result
is
Planning and
control
Responsibility
accounting
Delegation of
decision making
A
Which of the following statements about
performance management systems
is not true?
They encourage a
short-term view
among managers
Recommendations
are prescriptive and
suggest one best
way
They improve
organisational
performance in the
long-term
D
Which transfer pricing method will
preserve the subunit autonomy?
Negotiated pricing
Cost-based pricing
Full-cost pricing
B
Controllable costs, as used in a
responsibility accounting system, consist
of:
Only direct
materials and
direct labor.
Those costs that a
manager can
influence in the time
period under
review.
Those costs about
which a manager has
some knowledge.
Those costs that are
influenced by parties
external to the
organization.
C
Evaluation of Capital Budgeting
Proposals is based on Cash Flows
because:
Cash Flows are
suggested by SEBI
Cash is more
important than profit
None of the above
C
Sale of machine of machine
merchandising business is –
Capital income
Revenue income
Revenue receipt
D
What do we call a formal comparison of
the actual costs and benefits of a project
with original estimates?
Feedback audit
Cost-benefit
analysis
Business scorecard
report
A
Compliance with the Standard of Auditing
is the responsibility of
Those charged
with governance
Auditor
Audit committee
C
Cost Audit is comprised in which of the
following steps?
Planning, Review,
Reporting
Review,
Verification,
Reporting
Planning, Conducting,
Reporting
C
The financial statements of the company
shall be authenticated by
Chief financial
officer only if he is
director.
Chairperson only if
he is authorized by
the board.
Statutory Body
C
The ________ compares the dollar return
generated by the firm to the return
expected by the investors of the capital
invested by them in the firm.
EVA
ROI
DuPont Chart
B
Which one of the following is a ‘lag’
performance indicator
Return on capital
employed
Number of
complaints received
from customers
Output per employee
B
Economic Value Addition was developed
by ______________
Peter Drucker
Koontz & O'Donnel
Anthony &
Govindrajan
A
The Tata Group of Industries have
modified and internalised the Baldridge
Criteria and is known as the
________________________
Jamsetji Tata
Award
Tata Business
Excellence Model
(TBEM)
Annual Awards of
Business Excellence
(AABE)
C
Which of the following pair about
Paradigm Shifts in the contemporary
Business Environment is incorrect?
Competition to
Opening Up
Production to
Marketing
Volume to Profit
B
Intangible benefits in capital budgeting
would include all of the following except
increased …..…..
Employee loyalty
Salvage value
Product safety
C
Which of the following is not typical cash
flow related to equipment purchase and
replacement decision?
Overhaul of
equipment
Salvage value of
equipment when
project is complete
Depreciation expense
D
As per the RBI Internationals Banks have
to maintain a Capital Adequacy Ratio of
_______________
9%
12%
10%
B
Which of the following is not a part of
loan assets classification
Earning Assets
Loss Assets
Doubtful Assets
B
Earliest finish time can be regarded as
Earliest start time
duration of activity
Latest finish time +
duration of activity
Latest finish time
duration of activity
A
The first use of the term “Social Audit” is
generally attributed to ………………
George Coyder
Charles Medawar
Amartya Sen
B
The stipulations as regards maintenance
of accounts of / by NGOs / NPOs are
stipulated by which of the following?
The Public Trust
Act
The Companies Act
The Indian Trust Act
D
PERT is based on the assumption that an
activity's duration follows
_________________
Probability
Distribution
Uniform Distribution
Exponential
Distribution
B
____________________ of the Companies
Act, 2013 provides that the Internal
Auditor shall be a Chartered Accountant
or a Cost Accountant or any other
professional as may be decided by the
Board of Directors.
Section 138
Section 142
Section 146
B
Cost Audit is applicable in case of the
companies falling under certain specific
categories of industries and for those
companies who have been asked by the
central government to maintain the cost
accounting records and get these cost
accounting records audited as per the
provisions of _________________ of the
Companies Act, 2013
Section 138
Section 142
Section 146
A
Section 139 provides that the first auditor
of the company shall be appointed by
Board of Directors of the company within
____________ days
30
120
45
B
International auditing standards are
issued by the:
Financial
Accounting Audit
Board
International Audit
and Assurance
Standards Board
Auditing Practices
Board
C
In a responsibility report for a profit center,
controllable fixed costs are deducted from
contribution margin to show:
Controllable
margin
Net income
Income from
operations
B
Internal Perspective is part of the
Complete Balanced Scorecard Strategy.
This is a correct sub item for this
perspective
Customer solutions
Strategic
Technologies
Revenue Growth
Strategy
A
Learning & Growth Perspective: role for
intangible assets -- people, systems,
climate and culture is part of the BSC
Strategy. Identify which of the following is
a sub item of Learning & Growth
Perspective
Low total cost
Operations theme
Strategic
technologies
D
Which of the following would have a low
likelihood of being organized as a profit
center?
The billing
department of an
Internet Services
Provider (ISP).
The mayor's office
in a large city
Both "C" and "D"
above.
D
Which one of the following is a ‘lag’
performance indicator
Return on capital
employed
Number of
complaints
received from
customers
Output per employee
B
Cash Inflows from a project include
After-tax Operating
Profits
Raising of Funds
Both (a) and (b).
C
If capital expense is recorded as revenue
expense then which calculation will be
wrong?
Debtors
Creditors
Net profit
D
In Capital Budgeting, Sunk cost is
excluded because it is
Not Incremental
Not Reversible
Reversible
B
Which of the following is not a capital
budgeting decision?
Merger
Replacement of an
Asset
Inventory Level
D