Accounting 2 Final Exam – Flashcards
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Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be:
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decentralized
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In evaluating the profit center manager, the income from operations should be compared:
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to historical performance or budget
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Which of the following is not a disadvantage of decentralized operation?
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Top management freed from everyday tasks to do strategic planning
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Which of the following would be most effective in a small owner/manager-operated business?
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centralization
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Responsibility accounting reports for profit centers will include
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revenues, expenses, net income or loss from operations
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Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?
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investment center
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The investment turnover is the:
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ratio of sales to invested assets
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A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):
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profit center
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In a cost center, the manager has responsibility and authority for making decisions that affect:
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costs
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The best measure of managerial efficiency in the use of investments in assets is:
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investment turnover
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Identify the formula for the rate of return on investment.
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Income From Operations/Invested Assets
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The costs of services charged to a profit center on the basis of its use of those services are called:
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service department charges
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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:
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direct expenses
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The profit margin is the:
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ratio of income from operations to sales
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Which of the following is not one of the common types of responsibility centers?
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revenue center
