MGT 3200 Chapter Notes - Chapter 14: Financial Statement, Quick Ratio, Transfer Pricing
Document Summary
Managerial control: explain why companies develop control systems for employees. Left to their own devices, employees may act in ways that do not benefit the. Control systems are designed to eliminate idiosyncratic behavior and keep employees directed toward achieving the goals of the firm. Budgets combine the benefits of feed forwarding, concurrent, and feedback controls. They are used as an initial guide for allocating resources, a reference point for using funds, and a feedback mechanism for comparing actual levels of sales and expenses with their expected levels. Recently companies have modified their budgeting processes to allocate costs over basic processes (such as customer service) rather than to functions or departments. By changing the way they prepare budgets, many companies have discovered ways to eliminate waste and improve business processes: recognize basic types of financial statements and financial ratios used as controls. The basic financial statements are the balance sheet and the profit and loss statement.
