Question 1

Separation of businesses into more manageable operating units is termed centralization.

Accepted Answer

False

Question 2

The service department will determine its service department charge rate and charge the company's divisions or departments based on the usage of the service by each department.

Accepted Answer

True

Question 3

The amount of details presented in a budget performance report for a cost center depends upon the level of management to which the report is directed.

Accepted Answer

True

Question 4

The process of measuring and reporting operating data by areas of responsibility is termed responsibility accounting.

Accepted Answer

The answer of The process of measuring and reporting operating...

Question 5

Personnel administration expense for a department in a store is an indirect expense.

Accepted Answer

The answer of Personnel administration expense for a department in...

Question 6

Property tax expense for a department store's store equipment is an example of a direct expense.

Accepted Answer

The answer of Property tax expense for a department store's...

Question 7

A decentralized business organization is one in which all major planning and operating decisions are made by top management.

Accepted Answer

The answer of A decentralized business organization is one in...

Question 8

The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.

Accepted Answer

The answer of The primary disadvantage of decentralized operations is...

Question 9

Budget performance reports prepared for the vice-president of production would generally contain less detail than the reports prepared for the various plant managers.

Accepted Answer

The answer of Budget performance reports prepared for the vice-president...

Question 10

The underlying principle of allocating operating expenses to departments is to assign each department an amount of expense proportional to the revenues of that department.

Accepted Answer

The answer of The underlying principle of allocating operating expenses...

Question 11

The three common types of responsibility centers are referred to as asset centers, liabilities centers, and equity centers.

Accepted Answer

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Question 12

A responsibility center in which the department manager has responsibility for and authority over costs in the department is termed a cost center.

Accepted Answer

The answer of A responsibility center in which the department...

Question 13

A centralized business organization is one in which all major planning and operating decisions are made by top management.

Accepted Answer

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Question 14

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed indirect expenses.

Accepted Answer

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Question 15

The profit center income statement should include only controllable revenues and expenses.

Accepted Answer

The answer of The profit center income statement should include...

Question 16

Sales commissions expense for a department store is an example of a direct expense.

Accepted Answer

The answer of Sales commissions expense for a department store...

Question 17

Operating expenses incurred for the entire business as a unit that are not subject to the control of individual department managers are called indirect expenses.

Accepted Answer

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Question 18

The primary accounting tool for controlling and reporting for cost centers is a budget performance report.

Accepted Answer

The answer of The primary accounting tool for controlling and...

Question 19

Controllable expenses are those that can be influenced by the decisions of the profit center management.

Accepted Answer

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Question 20

A responsibility center in which the authority and responsibility for costs and revenues is vested on the department manager is termed an investment center.

Accepted Answer

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Quiz 14: Performance Evaluation for Decentralized Operations