The Process of Control
The steps in the control process are simple.
• The first step, establishing standards of performance, is an essential part of
effective planning. Standards should be measurable, verifiable, and tangible
to the extent possible.
Examples are: • standard rate of production established by work
measurement; • budgeted cost of computer usage; • targeted value for
product reliability; or • desired room temperature.
• The second step (and the start of the actual control process) is
measurement of the actual level of performance achieved.
• The third step is comparison of the two, measurement of the variance
(deviation between them), and communicating this deviation promptly to the
entity responsible for control of this performance, so that they might identify
what changed to cause the deviation to occur and identify potential corrective
actions.
• The final step is taking corrective action as required to “compel events to
conform to plans.”
Three Perspectives on the Timing of Control
 Feedback Control.
the output of a system can be measured and the variance between measured
and desired output is used to adjust the system
 Screening or Concurrent Control.
Controls may also be applied concurrently with the effort being controlled.
 Feedforward (or Preliminary or Steering) Control.
The essence of feedforward control is a system that can predict the impact of
current actions or events on future outcomes, so that current decisions can be
adjusted to assure that future goals will be met.
Financial Statements
 The balance sheet or statement of financial position is a summary of the
financial balances of a sole proprietorship, a business partnership, a
corporation or other business organization
 Assets are what the company owns and consist principally of current
assets (assets that can be converted into cash within a year) and fixed
assets (property, plant, and equipment at original cost, less the cumulative
depreciation of plant and equipment [but not land] and depletion of natural
resources since they were purchased).
 Liabilities are what the firm owes and consist of current liabilities that
must be paid within a year and long-term debt.
 Net worth is what is left over after liabilities have been subtracted from
the assets of the business. In a sole proprietorship, it is also known as
owner’s equity.

An income statement also called a profit and loss or revenue and
expense statement, shows the financial performance of the firm over a
period of time (usually a year or a month).