Mechanical process

control
Closed loop/ automatic/
cybernatiing control
It manages a process by means of a
self-regulating system. It is a strong
feedback system.
e.g.
home thermostat
a desired temp. is set by adjusting a
lever or wheel on the thermostat.

Mechanical process
control
Open-loop/ noncybernating control
it requires an external monitoring
system or an external agent to
complete the loop.
e.g. automatic part of a control
system provide a warning of a
variance from planned values, then
human judgment is required to
identify the reasons and to determine
corrective action

Prospective on the timing of

control
Feedforward controls,
sometimes called preliminary or
preventive controls, attempt to identify
and prevent deviations in the standards
before they occur. Feedforward controls
focus on human, material, and financial
resources within the organization.
These controls are evident in the
selection and hiring of new employees.

Prospective on the timing of

control
For example organizations attempt to
improve the likelihood that
employees will perform up to
standards by identifying the
necessary job skills and by using
tests and other screening devices to
hire people with those skills.

Prospective on the timing of

control
Concurrent controls
monitor ongoing employee activity to
ensure consistency with quality
standards. These controls rely on
performance standards, rules, and
regulations for guiding employee
tasks and behaviors. Their purpose is
to ensure that work activities produce
the desired results.

Prospective on the timing of

control
As an example, many
manufacturing operations include
devices that measure whether the
items being produced meet quality
standards. Employees monitor the
measurements; if they see that
standards are not being met in some
area, they make a correction
themselves or let a manager know
that a problem is occurring.

Prospective on the timing of

control
Feedback controls
involve reviewing information to determine
whether performance meets established
standards. For example, suppose that an
organization establishes a goal of increasing
its profit by 12 percent next year. To ensure
that this goal is reached, the organization
must monitor its profit on a monthly basis.
After three months, if profit has increased by 3
percent, management might assume that
plans are going according to schedule.

Characteristics of effective
control system
Effective
Efficient/ economical
Timely: info in time to take correct action
Flexible: adjustable to change condition
Understandable: provide info desired by users
Tailored: control system should deliver to each level of
manager, the information needed for decesions
Highlight deviations: flag parameters that deviate from
planed values by more than a specified percentage for
special management attention.
Lead to corrective action: incorporate automatic correction
or communicate to an agent for effective action

Financial control
How to support and contribute to their company
Financial statement
Use to prepare tax return or loan application
Financial ratio
Afinancial ratiooraccounting ratiois a relative
magnitude of two selected numerical values taken
from an enterprise's financial statements. It is used
by managers within a firm, by current and potential
shareholders(owners) of a firm, and by a firm's
creditors.

Financial control
Financial control
It includes financial statement (balance
sheet & income statement), financial ratio
used in ratio analysis , financial &
operating budgets & the nature of the
budgeting process an financial audits.
Financial statement provides the basic
information for control of cash and credit,
which are essential to the cash and credit.

Control techniques
Budget
It is a plan for future allocation & use of
resources
Type of budget
Cash budget
It estimate future revenues & expenditure
and there timing during the budgeting period
It tells managers when cash must be
borrowed & when excess cash will be
available for temporary investment.

Control techniques
Capital expenditure budget
Future investment in plant &
equipment
Balance sheet budget
It uses previous two estimates to
predict what the balance sheet look
like at the end of the budgeting
period

Balance Sheet
Assets

Liabilities
Owner's
(Stockholder
s') Equity

Assets
Within the assets segment, accounts
are listed from top to bottom in order
of theirliquidity, that is, the ease
with which they can be converted
into cash. They are divided into
current assets, those which can be
converted to cash in one year or less;
and non-current or long-term assets,
which cannot

Current Assets
Cash & cash equivalent the most liquid assets, these can includeTreasury bills
and short-termcertificates of deposit, as well as hard currency
Marketable securities: aresecuritiesor debts that are to be sold within a
year. These are financial instruments that can be easily converted to cash
such as government bonds, common stock or certificates of deposit
Accounts receivable:is a legally enforceable claim for payment held by a
business for goods supplied and/or services rendered that customers/clients
have ordered but not paid for. These are generally in the form of invoices
raised by a business and delivered to the customer for payment within an
agreed time frame
Inventory: goods available for sale, valued at the lower of the cost or market
price
Prepaid expenses: Prepaid expensesare futureexpensesthat have been
paid in advance. You can think ofprepaid expensesas costs that have
been paid but have not yet been used up or have not yet expired. The
amount ofprepaid expensesthat have not yet expired are reported on a
company's balance sheet as an asset

Long Term Assets

Long-term investments: securities that will not
or cannot be liquidatedin the next year
Fixed assets: assets which are purchased for
long-term use and are not likely to be converted
quickly into cash, such as land, buildings, and
equipment .
Intangible assets: is not physical in nature.
Corporate intellectual property, including items
such as patents, copyrights and business
methodologies, areintangible assets, as are
goodwill and brand recognition.

Liabilities
Liabilities a thing for which someone
is responsible, especially an amount
of money owed
bills it has to pay to suppliers to
interest onbondsit has issued to
creditors to rent, utilities and
salaries. Current liabilities are those
that are due within one year and are
listed in order of their due date.
Long-term liabilities are due at any
point after one year.

Current Liabilities

Current portion of long-term debt

Bank indebtedness
Interest payable
Rent, tax, utilities
Wages payable
Customer prepayments
Dividends payable: aredividendsthat a
company's board of directors has declared
to bepayableto its shareholders

Long Term Liability

Long-term debt: interest and principle on bonds
issued
Pension fund liability:
Deferred tax liability: taxes that have been accrued
but will not be paid for another year; besides timing,
this figure reconciles differences between
requirements for financial reporting and the way tax
is assessed, such asdepreciationcalculations
Some liabilities areoff-balance sheet, meaning that
they will not appear on the balance sheet.Operating
leasesare an example of this kind of liability.

Shareholder Equity
Equity is the owners claim on the
assets of a business. It represents
assets that remain after deducting
liabilities.
Shareholder equity=Total assets Total
liabilities

Shareholder Equity
Retained earnings: retainedby
the company to be reinvested in its
core business, or to pay debt.
Owners Capital:Owners
investment into the company plus
the net income earned by the
company, minus any withdrawals
made by the owner.

Company name
Balance Sheet
16 November 2016
Assets (current)
Cash
$6,600
Accounts Receivable
$6,200
Assets (non-current)
Tools and equipment
$25,000
Total
$37,800

Liabilities and Owners'

Equity
Liabilities
Notes Payable $5,000
Accounts Payable $25,000
Total liabilities $30,000O
wners' equity
Capital Stock $7,000
Retained Earnings $800
Total owners' equity$7,800
Total $37,800