Question & Answer: Compared to conventional accounting, lean accounting ……..

Compared to conventional accounting, lean accounting …

	A.	links performance measurement to use of direct labor.
	B.	emphasizes meeting short-term budget targets.
	C.	provides information for better lean decision-making.
	D.	adds transactions for better information and control.

2. Traditional standard-cost-based performance measurement and reporting systems used at most manufacturing companies …

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	A.	motivate people to use non-lean procedures.
	B.	eliminate wasteful transactions and simplify reporting.
	C.	link performance measures directly to the drivers of value creation.
	D.	are based on principles and assumptions of lean management and lean production.

Lean accounting …

focuses on individual product costs.

provides a way to focus the business on value created for customers.

does not attempt to measure the financial impact of lean improvements.

uses traditional performance measures.

QUESTION 7

1. Which of the following is a flaw associated with traditional accounting performance measures?

	A.	Traditional measures are reported too frequently – often they are reported on a monthly basis.
	B.	Traditional measures are primarily operational measures – which ignore the financial consequences of operating performance.
	C.	Traditional measures are too complex. Operators and managers cannot effectively use what they do not understand.
	D.	A, B, and C are all flaws associated with traditional accounting performance measures.

QUESTION 8

1. Why do conventional accounting systems rely on detailed tracking of transactions (transaction-based control) to maintain operational control?

	A.	Transaction-based control is required by the Sarbanes-Oxley Act.
	B.	Transaction-based control is the most efficient and effective way to achieve financial and operational control.
	C.	Transaction-based control is one way to impose control on operating processes that are essentially out-of-control.
	D.	Transaction-based control is the only way to achieve control in computerized systems.

QUESTION 9

1. Lean accounting supports lean decision-making by providing information on how alternative courses of action affect …

	A.	gross profit margins and standard costs of individual products.
	B.	profitability by individual customer and overall earnings per share.
	C.	direct labor costs and machine utilization.
	D.	flow through the value stream and contribute to value stream profitability.

QUESTION 10

1. To support lean thinking, lean accounting organizes and reports financial results at the level of the …

	A.	functional area or department.
	B.	individual customer.
	C.	individual product or service.
	D.	value stream.

Expert Answer

4. Answer: C. Provides information for better lean decision-making

The information, reports, and measurements can be provided by lean accounting quickly and easily and hence lean decision-making is enabled.

5. Answer: A. motivate people to use non-lean procedures.

Lean accounting motivates people to use lean decision making while the traditional systems motivate people to use non-lean procedures.

6. Answer: B. Provides a way to focus the business on value created for customers.

The focus of lean accounting being the value stream, it provides ways to focus on value created for customers.

7. Answer: D. A, B, and C are all flaws associated with traditional accounting performance.

All those stated are flaws of the traditional accounting performance measures.

8. Answer: C. Transaction-based control is one way to impose control on operating processes that are essentially out-of-control.

9. Answer: D. flow through the value stream and contribute to value stream profitability.

The focus of lean accounting is the value stream.

10. Answer: D. Value stream

In lean accounting, the financial and performance measurement information is organized around the value stream and not function, department-wise or customer-wise, etc.

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