chap010(3) - Chapter 010, Decentralization True / False...

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Chapter 010, Decentralization True / False Questions 1. A segment is any part or activity of an organization about which a manager seeks cost, revenue, or profit data. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement AICPA FN: Reporting Learning Objective: 3 Level: Easy 2. A responsibility center is a business segment whose manager has control over costs, revenues, or investments in operating assets. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement AICPA FN: Reporting Learning Objective: 3 Level: Easy 3. Residual income is used in the numerator to compute turnover in an ROI analysis. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 4. Net operating income is earnings before interest and taxes. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement AICPA FN: Reporting Learning Objective: 1 Level: Easy 10-1
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Chapter 010, Decentralization 5. Land held for possible plant expansion would be included as an operating asset in the ROI calculation. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Medium 6. Margin equals Stockholders' Equity divided by Sales. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 7. The use of return on investment (ROI) as a performance measure may lead managers to reject a project that would be favorable for the company as a whole. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Medium 8. Residual income is equal to the difference between total revenues and operating expenses. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 2 Level: Medium 10-2
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Chapter 010, Decentralization 9. When using residual income as a measure of performance, it is not meaningful to compare the residual incomes of divisions of different sizes. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 2 Level: Easy 10. A cost center is also a responsibility center. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 3 Level: Easy 11. The basic objective of responsibility accounting is to charge each manager with those costs and/or revenues over which he has control. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 3 Level: Easy 10-3
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Chapter 010, Decentralization Multiple Choice Questions 12. Which of the following segment performance measures will decrease if there is an increase in the interest expense for that segment? a.
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chap010(3) - Chapter 010, Decentralization True / False...

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