2nd PUC Business Studies Question Bank Chapter 8 Controlling

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Students can Download Business Studies Chapter 8 Controlling Questions and Answers, Notes Pdf, 2nd PUC Business Studies Question Bank with Answers helps you to revise the complete Karnataka State Board Syllabus and to clear all their doubts, score well in final exams.

Karnataka 2nd PUC Business Studies Question Bank Chapter 8 Controlling

Question 1.
What is meant by controlling? ( 1 Mark )
Answer:
Controlling means ensuring that activities in an organisation are performed as per the plans.
OR
Controlling is the process of ensuring that actual activities conform to planned activities.

Question 2.
Define managerial control. ( 2 Marks )
Answer:
According to Koontz and O’Donnel, “Managerial control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans.”

Question 3.
Explain the importance of controlling in an organisation.
(OR)
A good control system helps an organisation in many ways. Justify the statement with any four points. ( 4 Marks )
Answer:
Control is an indispensable function of management. A good control system helps an organisation in the following ways:

  • It helps in accomplishing organizational goals: It helps in proper implementation of plans and thereby contributes to achieve the organizational goals. It also helps in finding out deviations immediately and to take corrective actions.
  • It helps in judging accuracy of standards: A good control system enables management to verify whether the standards set are accurate and objective. Thus, it helps to review and revise the standards, if necessary.
  • It helps in making efficient use of resources: Controlling helps to reduce wastage and spoilage of resources. Thus, it ensures that resources are used in the most effective and efficient manner.
  • It helps in improving employee motivation: A good control system motivates the employees and helps them to give better performance by enabling them to know well in advance what they are expected to do and what are the standards of performance.
  • It helps in ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimize dishonest behavior on the part of the employees by keeping a close check on their activities.
  • It helps in facilitating coordination in action: By providing direction to all activities and efforts for achieving organizational goals, controlling coordinates all the activities in the organisation. (Write any four points)

2nd PUC Business Studies Question Bank Chapter 8 Controlling

Question 4.
Explain the limitations of controlling. ( 4 Marks )
Answer:
Although controlling is an important function of management, it suffers from the following limitations:

  • Difficulty in setting quantitative standards: Control system loses some of its effectiveness when standards
    cannot be defined in quantitative terms. Employee morale, job satisfaction and human behaviour are such areas where this problem might arise. This makes measurement of performance and their comparison with standards a difficult task.
  • Little control / No control: Generally an enterprise cannot control external factors such as govt, policies, technological changes, competition etc.
  • Resistance from employees: Control is often resisted by employees. They see it as a restriction on their freedom. For instance, employees may object the setting up of CCTV.
  • Costly affair: Control r a costly affair as it involves a lot of expenditure, time and effort. A small enterprise cannot afford to install an expensive control system.

Question 5.
Explain briefly the relationship between planning and controlling. ( 4 Marks )
Answer:
Planning and controlling are inseparable twins of management.
The standards of performance which serve as the basis of controlling are provided by planning. Controlling is necessary to ensure that events conform to plans. Thus, planning without controlling is meaningless. Similarly, controlling is blind without planning.

Planning is a prerequisite for controlling. Planning seeks consistent and integrated programmes; while controlling | seeks to compel events to conform to plans.

Planning is basically an intellectual process which prescribe an appropriate course of action for achieving objectives. On the other hand, controlling checks whether decisions have been translated into desired action. Thus, planning is prescriptive while controlling is evaluative.

Plans are prepared for future and are based on forecasts about future conditions. Therefore, planning is called a forward looking function. While, controlling involves analysis of past activities to find out deviations from the standards. In that sense, controlling is a backward looking function.

However, it should be noted that planning is guided by past experience and corrective action initiated by control function. And control function aims to improve future performance. Therefore, planning and controlling are both backward looking as well as a forward looking , function.

Thus, planning and controlling are interrelated and reinforce each other. Planning based on facts makes controlling easier and effective and controlling improves future planning by providing information derived from past experience.

Question 6.
Explain briefly the steps involved in controlling process. ( 4 Marks )
Answer:
Controlling is a systematic process involving the following steps.

(1) Setting performance standards: The first step in the controlling process is setting up of performance standards. Standards are the criteria (Yardstick) against which actual performance would be measured. Standards can be set in both quantitative as well as qualitative terms. For instance, standards set in terms of cost to be incurred, revenue to be earned, product units to be produced and sold, all represent quantitative standards. Improving motivation level of employees. Improving consumer satisfaction level, all represent qualitative standards.

(2) Measurement of actual performance: The next step is measurement of actual performance. Measurement of actual performance can be made by a study of various reports and statements received from the subordinates. It can also be made by personal observation, when the subordinates are at work. Sample checking is another method of measurement of performance in large organizations. Efficiency of production can be measured by counting the number of pieces produced and number of defective pieces in a batch.

(3) Comparing actual performance with standards: This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired (i.e., standard) results.

(4) Analysing deviations: Deviation means variation from the standard. Deviations which are beyond the acceptable range of deviations and deviations in key areas of business need to be determined and attended urgently. Critical point control and Management by exception should be used by a manager in this regard.

After identifying the deviations that demand managerial attention, these deviations need to be analysed for their causes. The causes of deviations may be due to unrealistic standards, defective process, inadequacy of resources, inefficiency of an employee or environmental factors. Effort should be made to identify, the exact cause or causes of deviations to facilitate corrective action to be taken.

(5) Taking corrective actions: The final step in the controlling process is taking corrective action. When the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.

Corrective action might involve training of employees, providing of additional facilities, revision of standards, change the quality specification of materials to be used, repair or replace or undertake technological upgradation of machinery, improve the physical conditions of work or modify the existing process.

2nd PUC Business Studies Question Bank Chapter 8 Controlling

Question 7.
What is standard in controlling process? ( 1 Mark )
Answer:
Standard is the criterion (i.e., yardstick) against which the actual performance would be measured.

Question 8.
State any two traditional techniques of management control. ( 2 Marks )
Answer:
Traditional techniques of management control:

  1. Personal observation
  2. Statistical reports
  3. Break even analysis
  4. Budgetary control
    (Write any two points)

Question 9.
State any two modern techniques of managerial control. ( 2 Marks )
Answer:
Modern techniques of managerial control:

  1. Return on investment
  2. Ratio analysis
  3. Responsibility accounting
  4. Management audit
  5. PERT and CPM
  6. Management information system
    (Write any two points)

Question 10.
As a manager of an organisation, what are the modern techniques of controlling you would like to adopt? ( 5 Marks )
Answer:
As a manager of an organisation, I would like to adopt the following modem techniques of controlling:

  • Return on investment
  • Ratio analysis
  • Responsibility accounting
  • Management audit
  • PERT and CPM
  • Management Information System
    (Write any 5 points)

2nd PUC Business Studies Question Bank Chapter 8 Controlling

Question 11.
Give the meaning of break even analysis. ( 2 marks )
Answer:
Break even analysis is a technique used by managers to study the relationship between costs, volume and profits.
It determines the probable profit and losses at different levels of activity.
The sales volume at which there is no profit, no loss is known as break even point.
2nd PUC Business Studies Question Bank Chapter 8 Controlling 1

Question 12.
What do you understand by budgetary control? ( 2 Marks )
Answer:

  • Budgetary control is a managerial control technique in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards.
  • A budget is a quantitative statement for a definite future period of time for the purpose of obtaining a given objective.

Question 13.
What is ratio analysis? ( 1 Mark )
Answer:
Ratio analysis refers to analysis of financial statements through computation of ratios such as current ratio, operating ratio, debt equity ratio and so on.

Question 14.
What is responsibility accounting? ( 2 Marks )
Answer:
Responsibility accounting is a system of accounting in which different sections, divisions and departments of an organisation are set up as ‘responsibility centres’ such as cost centre, revenue centre, profit centre and so on. The head of the centre is responsible for achieving the target set for his centre.

Question 15.
What is management audit? ( 2 Marks )
Answer:
Management audit refers to systematic appraisal of the overall performance of the management of an organisation.
OR
Management audit may be defined as evaluation of the functioning, performance and effectiveness of management of an organisation.

2nd PUC Business Studies Question Bank Chapter 8 Controlling

Question 16.
Expand PERT. ( 1 Mark )
Answer:
PERT = Programme Evaluation and Review Technique

Question 17.
Expand CPM. ( 1 Mark )
Answer:
CPM = Critical Path Method

Question 18.
Expand MIS. ( 1 Mark )
Answer:
MIS = Management Information System

2nd PUC Business Studies Question Bank Chapter 8 Controlling

Question 19.
What is management information system? ( 2 Marks )
Answer:
Management information system (MIS) is a computer based information system that provides information and support for effective managerial decision making.

I. Multiple choice questions (1 Mark each)

Question 1.
An efficient control system helps to
(a) Accomplish organisational objectives
(b) Boosts employee morale
(c) Judges accuracy of standards
(d) All of the above
Answer:
(d) All of the above

Question 2.
Controlling function of an organisation is
(a) Forward looking
(b) Backward looking
(c) Forward as well as backward looking
(d) None of the above
Answer:
(c) Forward as well as backward looking

Question 3.
Management audit is a technique to keep a check on the performance of
(a) Company
(b) Management of the company
(c) Shareholders
(d) Customers
Answer:
(b) Management of the company

Question 4.
Budgetary control requires the preparation of
(a) Training schedule
(b) Budgets
(c) Network diagram
(d) Responsibility centres
Answer:
(b) Budgets l

2nd PUC Business Studies Question Bank Chapter 8 Controlling

Question 5.
Which of the following is not applicable to responsibility accounting
(a) Investment centre
(b) Accounting centre
(c) Profit centre
(d) Cost centre
Answer:
(b) Accounting centre

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