Benchmarking is a process for improving some activity within an organization. We will illustrate benchmarking with the following example.

Company Q has identified one of its activities that needs improvement. The company conducts a search to find another organization that is considered to have mastered the activity. Perhaps it is Corporation J that is recognized as having the best practice for this activity. Corporation J's performance is viewed as the benchmark or standard or best practice.

Company Q will study Corporation J's performance and procedures in depth and will identify the differences between the organizations. Company Q will likely modify its procedures in order to bring its performance of the activity up to the level attained by Corporation J.

Studies show that exam questions are a great way to learn and retain important information. Gain access to our 1,700 accounting exam questions (and answers) when you upgrade to PRO.