They spell out specific required actions or non-actions, allowing no discretion.

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finance

Don Terry opened Terry Company, an accounting practice, in 2016. The following summarizes transactions that occurred during 2016: **1.** Issued a $120,000 face value discount note to First National Bank on July 1, 2016. The note had an 8 percent discount rate and a one-year term to maturity. **2.** Recognized cash revenue of$310,000. **3.** Incurred and paid $145,000 of operating expenses. **4.** Adjusted the books to recognize interest expense at December 31, 2016. **5.** Prepared the necessary closing entries at December 31, 2016. \ The following summarizes transactions that occurred in 2017: **1.** Recognized$346,000 of cash revenue. **2.** Incurred and paid $178,000 of operating expenses. **3.** Recognized the interest expense for 2017 and paid the face value of the note. **4.** Prepared the necessary closing entries at December 31, 2017. \ **Required** Prepare entries in general journal form for the transactions for 2016 and 2017, and post them to T-accounts.

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Terms in this set (41)

Planning

is a process concerned with selecting the mission, goals or objectives for the future and deciding on the action, tasks and resources to achieve it

Planning is an exercise that determines in advance

a. The ends (What is to be done or achieved?)
b. The means (How it is to be done?)
c. The timing (When to do what?)
d. The responsibility (Who should do what?)
e. The reason (Why it should be done?)

Formal plans

written, specific, and long term focus, involves shared goals for the org

Informal Plans

not written down, short term focus, specific to an organization unit

Characteristics of planning

Primary Function of Management
Intellectual process
Goal Oriented process
Future oriented process and involves forecasting
Dynamic in nature
Choosing from alternatives
Planning and Control are inseperable
Has limitations

Importance of Planning

Direction Setting
Holistic picture of consequences
No Haphazard actions
Economy in operations
Managing risks and uncertainties
Estimation of Needed resources
Better decision making
Promotion of team work
Provision for control
Technological development

Limitations of Planning

Lack of accurate information
Time consuming process
Expensive
Inflexibility
Environmental constraints
False security
Capital invested in fixed assets limits planning

Goals

are desired outcomes or targets. They guide management decision and form the criteria against which work results are measured. Hence they are called the foundations of planning

Plans

are documents that outline how goals are to be met. They usually include resource allocation, schedules and other actions necessary to accomplish the goals

Strategic Plans

Applies to the entire organization
Establishes the organizations overall goals
Carried out by top management/BOD
Seek to position the organization in term of the environment
Usually Covers extended periods of time

Tactical Plans

Used to implement some part of the strategy
Typically involves upper-mid management
Shorter time frame and more specific and concentre form

Operational Plans

Focus on carrying out tactical plan
Developed by middle/Lower mid management
Usually Covers a short period of time

Long term plans

plans with a time frame of over 3 years

short term plans

plans with a time frames less than one year

Single use plan

A one time plan specifically designed to meet the need of a unique situation

Standing Plans

Ongoing plans that provide guidance for activities performed repeatedly

Specific plans

Plans that are clearly defined and leave no room for interpretation

Directional plans

Flexible plans that set out general guidelines, provide focus but don't lock into course of action

Vision

States the mid term to long term objectives of the company

Mission

Identifies the basic purpose or function or tasks of an enterprise

Purpose

a company's reason for being

Strategy

Adoption of course of action and allocation of resources to achieve long term objectives of an enterprise

Objectives/Goals

Specific measurable activities that an enterprise takes towards achieving broader goals. Represent the end point of planning but also the end towards organizing, staffing, leading and controlling are aimed

Policies

Define an area within which a decision is to be made and ensure that the decision will be consistent with and contribute to an objective
Policies help decide issues before they become problems, make it unnecessary to analyse the same situation every time the situation comes up and unify other plans

Procedures

Plans that establish a required method of handling future activities.
They are chronological sequences of required actions - rather guide to actionsand detail how activities must be conducted

Rules

spell out specific required actions/non actions allowing no discretions.
are different from policies in that policies guide decision making where managers can use their discretion

Programs

are a complex of goals, policies, procedures, rules, task assignment necessary to carry out a given course of action

Budget

is a statement of expected results expressed in numerical terms

MBO

a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as criteria for measurement of their performance and contribution and deciding the course of action to be followed.

Main concept behind of MBO

The principle behind MBO is to make sure that everybody within the organization has a clear understanding of the aims, objectives of the organization and Is aware of their own role and responsibilities in achieving their aims

The complete MBO system is to make managers empowered employees acting to implement and achieve their goals, which automatically achieve those of the organization

Advantages of MBO

MBO helps in increasing motivation of employees as it involves employees in the goal setting process. Increasing employee empowerment increases employee job satisfaction and commitment
Manager and employee efforts are focused on activities that lead towards goal attainment
Better communication and coordination - Frequent reviews and interactions between superiors and subordinates help to maintain harmonious relationships
Departmental and individual goals are aligned with company goals

Disadvantages of MBO

Strategic goals/plans might get displaced by operational goals/plans
You need a strong employee-employer relationship else the effectiveness of MBO will be reduced
Tendency of constant change prevents MBO from taking hold

Decision making

The process of identifying and selecting a course of action out of the alternatives for achieving the given objectives or solving a problem
is a choice from among variety of alternatives.

Steps in Decision-making

Step I: Problem, Situation or a Scenario - Identifying a problem
Step II: What are the criteria that you will use for decision making
Step III: Assign Weights to the criteria
Step IV: Arrive at Alternatives
Step V: Analyze the Alternatives
Quantitative Analysis:
B. Qualitative Analysis:
Step VI: Selection from among Alternatives:
1. Past experience
2. Experimentation
3. Research and Analysis:
Step VII: Implementation of the alternative
Step VIII : Evaluation of the Decision effectiveness

Programmed Decisions

A decision that is a fairly structured decision or recurs with some frequency or both.
Example: What quantities of vegetables should be ordered on a Sunday in a grocery store
Managers have made the same or similar type of decision many times in the past and are the easiest to make
Rules or guidelines to follow while making programmed decisions

Non-programmed decisions

A decision that is relatively unstructured and occurs much less often a programmed decision.
Example: Where in India should DisneyLand Open a park
No specific procedures are available for making this decision
Clear Cut & specific information with regard to all variables is not available
Based on manager intuition and judgement

Strategic Decisions

Provide a direction to an organization by establishing its mission, vision, long term goals
Critical and can prove expensive and fatal for the organization
High managerial competence is essential for taking strategic decisions because these decisions are unstructured, programmed and most inventive
Unlikely to have complete or accurate information about key variables
Only top management is involved

Routine/Tactical Decisions

Supportive rather than central to the company's operations
All levels of management may be involved in decision making

Decision Making Under Certainty

A condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative.

Decision Making Under Risk

A condition in which the availability of each alternative and its potential payoffs and costs are all associated with risks.

Decision Making Under Uncertainty

A condition in which the decision maker does not know all the alternatives, the risks associated with each, or the consequences of each alternative.

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In the following exercises, V denotes the vertex of a parabola, F the focus, and D the directrix. Two of these are given. Find the third. F(-2, 5), V(-2, 1)

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algebra

Write the equation of the circle in standard form. Then sketch its graph. $$ x^2+y^2-6 x+10 y+25=0 $$

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calculus

Decide which of the following functions are $\mathcal{C}^1$, which are just differentiable. (a) $f (x, y) = \frac{2xy}{(x^2 + y^2)^2}$ (b) $f (x, y) = \frac{x}{y}+ \frac{y}{x}$ (c) $f (r, \theta) = \frac{1}{2} r \sin 2\theta, r > 0$ (d) $f (x, y) = \frac{x y}{\sqrt{x^2 + y^2}}$ (e) $f (x, y) = \frac{x^2 y}{x^4 + y^2}$

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algebra

How do the two formulas in Exercise earlier compare to the basic percentage formula $P=R B$ ?

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