Responsibility Accounting
(A. Decentralization and Per
MODULE 7 C. both make and implement key decisions
D. review the outcomes of key decisions only
RESPONSIBILITY ACCOUNTING AND TRANSFER PRICING
7. Decentralization occurs when
A. the firm’s operations are located over a large geographic area
A. DECENTRALIZATION AND PERFORMANCE EVALUATION B. authority for important decisions is delegated to lower segment
C. important decisions are made at the upper levels and the lowe
are responsible for implementing the decisions
THEORIES: D. none of the above
Centralization vs. decentralization
Centralization Goal congruence, Suboptimization & management by objectives
3. In a company with a centralized approach to responsibility accounting, upper-level managers Goal congruence
typically 8. Consistency between goals of the firm and the goals of its employe
A. make key decisions only A. goal optimization C. goal congruenc
B. implement key decisions only B. goal conformance D. goal compensa
C. both make and implement key decisions
D. review the outcomes of key decisions only 16. Goal congruence is most likely to result when
A. reports to managers include all costs
Decentralization B. managers’ behavior is affected by the criteria used to judge the
1. Why would a company decentralize? C. performance evaluation criteria encourage behavior in the c
A. to train and motivate division managers well as in the manager’s best interests
B. to focus top management’s attention to operating decisions D. a manager knows the criteria used to judge his or her performa
C. to allow division managers to concentrate on strategic planning
D. all of the above 35. When a manager takes an action that benefits his or her respo
company as a whole,
2. Advantages of decentralization include all of the following except A. it is a non-controllable action
A. divisional management is able to react to changing market conditions more rapidly than B. there is a lack of goal congruence
top management C. the center must be an artificial profit center
B. divisional management is a source of personnel for promotion to top management D. the manager should be fired
positions
C. decentralization can motivate divisional managers Suboptimization
D. decentralization permits divisional management to concentrate on company-wide 19. A management decision may be beneficial for a given profit ce
problems and long-range planning company. From the overall company viewpoint, this decision wou
A. goal congruence C. centralization
4. In a company with a decentralized approach to responsibility accounting, lower-level managers B. suboptimization D. maximization
typically
A. make key decisions only Management by objectives
B. implement key decisions only 17. An emphasis on obtaining goal congruence is consistent with a b
367
, Responsibility Accounting
(A. Decentralization and Per
called A. static reporting. C. responsibility a
A. management by crisis B. flexible accounting. D. master budgeti
B. management by objectives
C. management through goal congruence 36. Which of the following is critically important for a responsibility
D. just-in-time philosophy effective?
A. Each employee should receive a separate performance report.
38. In a responsibility accounting system, the process in which a supervisor and a subordinate B. Service department costs should be allocated to the operatin
jointly determine the subordinate’s goals and plans for achieving these goals is service.
A. Top-down budgeting C. Bottom-up budgeting C. Each manager should know the criteria used for evaluating his
B. Imposed budgeting D. Management by objectives D. The details on the performance reports for individual managers
on the report to their supervisor.
Responsibility Accounting
5. Responsibility accounting is a system whose attributes include Responsibility report
A. responsibility, liability, and culpability 13. The report to a territorial sales manager which shows the con
B. liability, accountability, and performance evaluation salesperson in the territory is called
C. performance evaluation, accountability, and responsibility A. a profit reportA. C. an absorption p
D. culpability, liability, and accountability B. a responsibility report D. a distribution re
6. Some basic elements of responsibility accounting are Responsibility centers
A. chart of accounts classification C. control-based reports 15. A responsibility center
B. budgeting system D. all of the above A. is an organization unit where management control exist
generating revenue
9. What term identifies an accounting system in which the operations of the business are broken B. is responsible for all other departments
down into reportable segments and the control functions of a foreperson, sales managers, or C. has a responsible manager in charge of it
supervisor is emphasized? D. all of the above
A. Responsibility accounting C. Operations-research accounting
B. Control accounting D. Budgetary accounting Activity center
32. A segment of an organization for which management wants to rep
10. The Atwood Company uses a performance reporting system that reflects the company’s performed separately is called a(n)
decentralization of decision making. The departmental performance report shows one line of A. cost center C. activity-based c
data for each subordinate who reports to the group vice-president. The data presented shows B. activity center D. batch activity c
the actual costs incurred during the period, the budgeted costs, and all variances from budget
for that subordinate’s department. The Atwood Company is using a type of system called Cost center
A. Flexible budgeting C. Responsibility accounting 20. The sequence that reflects increasing breadth of responsibility is
B. Contribution budgeting D. Cost-benefit accounting A. cost center, investment center, profit center
B. cost center, profit center, investment center
14. The accumulation of accounting data on the basis of the individual manager who has the C. profit center, cost center, investment center
authority to make day-to-day decisions about activities in an area is called D. investment center, cost center, profit center
368
(A. Decentralization and Per
MODULE 7 C. both make and implement key decisions
D. review the outcomes of key decisions only
RESPONSIBILITY ACCOUNTING AND TRANSFER PRICING
7. Decentralization occurs when
A. the firm’s operations are located over a large geographic area
A. DECENTRALIZATION AND PERFORMANCE EVALUATION B. authority for important decisions is delegated to lower segment
C. important decisions are made at the upper levels and the lowe
are responsible for implementing the decisions
THEORIES: D. none of the above
Centralization vs. decentralization
Centralization Goal congruence, Suboptimization & management by objectives
3. In a company with a centralized approach to responsibility accounting, upper-level managers Goal congruence
typically 8. Consistency between goals of the firm and the goals of its employe
A. make key decisions only A. goal optimization C. goal congruenc
B. implement key decisions only B. goal conformance D. goal compensa
C. both make and implement key decisions
D. review the outcomes of key decisions only 16. Goal congruence is most likely to result when
A. reports to managers include all costs
Decentralization B. managers’ behavior is affected by the criteria used to judge the
1. Why would a company decentralize? C. performance evaluation criteria encourage behavior in the c
A. to train and motivate division managers well as in the manager’s best interests
B. to focus top management’s attention to operating decisions D. a manager knows the criteria used to judge his or her performa
C. to allow division managers to concentrate on strategic planning
D. all of the above 35. When a manager takes an action that benefits his or her respo
company as a whole,
2. Advantages of decentralization include all of the following except A. it is a non-controllable action
A. divisional management is able to react to changing market conditions more rapidly than B. there is a lack of goal congruence
top management C. the center must be an artificial profit center
B. divisional management is a source of personnel for promotion to top management D. the manager should be fired
positions
C. decentralization can motivate divisional managers Suboptimization
D. decentralization permits divisional management to concentrate on company-wide 19. A management decision may be beneficial for a given profit ce
problems and long-range planning company. From the overall company viewpoint, this decision wou
A. goal congruence C. centralization
4. In a company with a decentralized approach to responsibility accounting, lower-level managers B. suboptimization D. maximization
typically
A. make key decisions only Management by objectives
B. implement key decisions only 17. An emphasis on obtaining goal congruence is consistent with a b
367
, Responsibility Accounting
(A. Decentralization and Per
called A. static reporting. C. responsibility a
A. management by crisis B. flexible accounting. D. master budgeti
B. management by objectives
C. management through goal congruence 36. Which of the following is critically important for a responsibility
D. just-in-time philosophy effective?
A. Each employee should receive a separate performance report.
38. In a responsibility accounting system, the process in which a supervisor and a subordinate B. Service department costs should be allocated to the operatin
jointly determine the subordinate’s goals and plans for achieving these goals is service.
A. Top-down budgeting C. Bottom-up budgeting C. Each manager should know the criteria used for evaluating his
B. Imposed budgeting D. Management by objectives D. The details on the performance reports for individual managers
on the report to their supervisor.
Responsibility Accounting
5. Responsibility accounting is a system whose attributes include Responsibility report
A. responsibility, liability, and culpability 13. The report to a territorial sales manager which shows the con
B. liability, accountability, and performance evaluation salesperson in the territory is called
C. performance evaluation, accountability, and responsibility A. a profit reportA. C. an absorption p
D. culpability, liability, and accountability B. a responsibility report D. a distribution re
6. Some basic elements of responsibility accounting are Responsibility centers
A. chart of accounts classification C. control-based reports 15. A responsibility center
B. budgeting system D. all of the above A. is an organization unit where management control exist
generating revenue
9. What term identifies an accounting system in which the operations of the business are broken B. is responsible for all other departments
down into reportable segments and the control functions of a foreperson, sales managers, or C. has a responsible manager in charge of it
supervisor is emphasized? D. all of the above
A. Responsibility accounting C. Operations-research accounting
B. Control accounting D. Budgetary accounting Activity center
32. A segment of an organization for which management wants to rep
10. The Atwood Company uses a performance reporting system that reflects the company’s performed separately is called a(n)
decentralization of decision making. The departmental performance report shows one line of A. cost center C. activity-based c
data for each subordinate who reports to the group vice-president. The data presented shows B. activity center D. batch activity c
the actual costs incurred during the period, the budgeted costs, and all variances from budget
for that subordinate’s department. The Atwood Company is using a type of system called Cost center
A. Flexible budgeting C. Responsibility accounting 20. The sequence that reflects increasing breadth of responsibility is
B. Contribution budgeting D. Cost-benefit accounting A. cost center, investment center, profit center
B. cost center, profit center, investment center
14. The accumulation of accounting data on the basis of the individual manager who has the C. profit center, cost center, investment center
authority to make day-to-day decisions about activities in an area is called D. investment center, cost center, profit center
368
