Chapter 1

Introduction to Business Processes

True-False Questions
1. The most common organizational structure within modern organizations is the functional
structure.

Answer: True Difficulty: Easy Page Reference: 1

Section: The Functional Organizational Structure Practice:

2. Losing sight of the big picture is commonly referred to as the silo effect.

Answer: True Difficulty: Medium Page Reference: 2

Section: The Functional Organizational Structure: The Silo Effect Practice:

3. Systems that support end-to-end processes are called business processes.

Answer: False Difficulty: Medium Page Reference: 4

Section: Business Processes Practice:

4. An enterprise system is a set of tasks or activities that produce desired outcomes.

Answer: False Difficulty: Easy Page Reference: 2

Section: The Functional Organizational Structure: Enterprise Systems Practice:

5. Without the various steps of the business process, a company can’t successfully bill
customers and ship products.

Answer: True Difficulty: Medium Page Reference: 4

Section: Business Processes Practice:

6. The lifecycle data management (design) process supports the design and development of
products from the initial product idea stage through the discontinuation of the product.

Answer: True Difficulty: Medium Page Reference: 5

Section: Business Processes Practice:

7. The material planning process is used to maintain internal assets such as machinery and to
delivery after-sales customer services such as repairs.

Answer: False Difficulty: Medium Page Reference: 5

Section: Business Processes Practice:
 8. The fulfillment process (sell) consists of all the steps involved in selling and delivering the
products to the organization’s customers.

Answer: True Difficulty: Medium Page Reference: 5

Section: Business Processes Practice:

9. The financial accounting process focuses on internal reporting to manage costs and revenues.

Answer: False Difficulty: Difficult Page Reference: 6

Section: Business Processes Practice:

10. The procurement process includes all of the tasks involved in acquiring needed materials.

Answer: True Difficulty: Medium Page Reference: 6

Section: Business Processes: Procurement-Buy Practice:

11. Within the production process, the issuing of raw materials takes place in the warehouse.

Answer: True Difficulty: Difficult Page Reference: 7

Section: Business Processes: Procurement-Make Practice:

12. Materials encompass all the products, components, and parts that are used in an organization.

Answer: True Difficulty: Medium Page Reference: 8

Section: Business Processes: Material Planning-Plan Practice:

13. Lead time is the time between placing the order and receiving confirmation that the item has
been shipped.

Answer: False Difficulty: Easy Page Reference: 8

Section: Business Processes: Material Planning-Plan Practice:

14. The purpose of material planning is to match supply with demand.

Answer: True Difficulty: Medium Page Reference: 8

Section: Business Processes: Material Planning-Plan Practice:

15. Insufficient supply results in a situation called “stock out.”

Answer: True Difficulty: Medium Page Reference: 8

Section: Business Processes: Material Planning-Plan Practice:

16. Excess supply will result in lower inventory costs because the company is eligible for a bulk
rate.

Answer: False Difficulty: Difficult Page Reference: 8

Section: Business Processes: Material Planning-Plan Practice:

17. Forecasts of finished goods are determined by data from material planning.
 Answer: True Difficulty: Medium Page Reference: 9
Section: Business Processes: Material Planning-Plan Practice:

18. Large warehouses do not need to move items as quickly and efficiently as smaller
warehouses.

Answer: False Difficulty: Medium Page Reference: 9

Section: Business Processes: Inventory and Warehouse Management-Store Practice:

19. Asset management is concerned with both the preventive and the corrective maintenance of
an organization’s equipment.

Answer: True Difficulty: Medium Page Reference: 10

Section: Business Processes: Asset Management and Customer Service-Service Practice:

20. Document management provides tools to manage and store documents securely and to keep
track of the multiple versions of these documents.

Answer: True Difficulty: Easy Page Reference: 10

Section: Business Processes: Lifecycle Data Management-Design Practice:

21. The final stage of asset management and customer service is the authorization maintenance
stage.

Answer: False Difficulty: Medium Page Reference: 11

Section: Business Processes: Asset Management and Customer Service-Service Practice:

22. The final stage of the customer service process is the settlement stage.

Answer: True Difficulty: Easy Page Reference: 11

Section: Business Processes: Asset Management and Customer Service-Service Practice:

23. A project is permanent in nature and is typically associated with smaller, simpler projects.

Answer: False Difficulty: Medium Page Reference: 11

Section: Business Processes: Project Management-Projects Practice:

24. During the planning phase of a project the scope of the project is defined and the milestones
and deadlines are established.

Answer: True Difficulty: Easy Page Reference: 12

Section: Business Processes: Project Management-Projects Practice:

25. Projects rely on resources located in and work performed in other processes.

Answer: True Difficulty: Medium Page Reference: 12

Section: Business Processes: Project Management-Projects Practice:

26. Common reports of financial accounting include income statement, profit and loss, and
balance sheet.
 Answer: True Difficulty: Medium Page Reference: 12
Section: Business Processes: Financial Accounting-Track for External Reporting
Practice:

27. Accounts payable is used to track money owed by customers.

Answer: False Difficulty: Easy Page Reference: 13

Section: Business Processes: Financial Accounting-Track for External Reporting
Practice:

28. Asset accounting is concerned with tracking financial data related to assets such as
machinery and cars.

Answer: True Difficulty: Medium Page Reference: 13

Section: Business Processes: Financial Accounting-Track for External Reporting
Practice:

29. Accounts receivable is used to track money that is owed to vendors.

Answer: False Difficulty: Easy Page Reference: 13

Section: Business Processes: Financial Accounting-Track for External Reporting
Practice:

30. Management accounting helps an organization track costs and revenues to assess its
profitability

Answer: True Difficulty: Medium Page Reference: 13

Section: Business Processes: Management Accounting-Track for Internal Reporting
Practice: