Question

1. A car dealership decides to rank its sales people based on the number of cars that they sell during a month, in the hopes of making more money by making more sales. One salesman reacts by offering very generous deals to customers, in order to make sales, even though the dealership will not make any profits at these prices. This behavior can best be characterized as:

	A.	Acting to modify the measurement system before it goes into effect.
	B.	Doing what is desired in response to being measured
	C.	Doing what looks good on the measurement system, even though it was not what was actually desired
	D.	Lying

Question 2

When a financial statement analyst compares various figures on a company’s income statement for a single year, and notes that a particular expense is 23% of sales, the analyst is performing:

A.

Vertical analysis

B.

Horizontal analysis

C.

Credit analysis

D.

Solvency analysis

Answer 1

Answer:

1. Option (c) Doing what looks good on the measurement system, even though it was not what was actually desired

2. Option (a) Vertical Analysis