12 Questions
What is the primary purpose of Financial Results Control Systems in for-profit firms?
To influence employee behaviour through financial measures
What is a benefit of using financial measures in Financial Results Control Systems?
They offer a concise evaluation of performance by combining various operating strategies
What is an advantage of Financial Results Control Systems compared to other forms of management control?
The cost of implementing these control systems is small compared to other forms of management control
What is a characteristic of financial measures in Financial Results Control Systems?
They are concise and objective
What is a core element of Financial Results Control Systems, in addition to Financial Responsibility Centres?
Planning and Budgeting systems and Incentive plans or contracts
Why do financial measures act as a reminder to employees in Financial Results Control Systems?
Because they remind employees that initiatives will benefit the organisation only if they result in improved financial performance
What is the main characteristic of a revenue centre?
Managers are accountable for generating revenues
What type of cost centres have a direct and quantifiable relationship between inputs and outputs?
Standard/engineered cost centres
What is a characteristic of profit centres?
Managers have significant influence over both revenues and costs
What is the name of the type of profit centre that does not directly interface with the market?
Micro profit centre
What is the name of the financial metric used to evaluate investment centres?
All of the above
What is the term used to describe a revenue centre where managers are also held responsible for some expenses?
Net revenue centre
This quiz assesses your understanding of Financial Responsibility Centres, a crucial component of financial results control systems used in organisations. Learn how these systems influence employee behaviour, particularly among managers and top management, and their advantages in for-profit firms.
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