Chapter 12 practice quiz answers

Chapter 12 practice quiz answers - Chapter 12 Segment...

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Unformatted text preview: Chapter 12 Segment Reporting and Decentralization True/False Questions 1. Allocating common fixed costs to segments on segmented income statements reduces the usefulness of such statements. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting; Measurement LO: 1 Level: Easy 2. A segment is any part or activity of an organization about which a manager seeks cost, revenue, or profit data. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting; Measurement LO: 1 Level: Easy 3. A responsibility center is a business segment whose manager has control over costs, revenues, or investments in operating assets. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting; Measurement LO: 1 Level: Easy 4. Residual income is used in the numerator to compute turnover in an ROI analysis. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 5. Net operating income is earnings before interest and taxes. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting; Measurement LO: 2 Level: Easy 6. Land held for possible plant expansion would be included as an operating asset in the ROI calculation. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium 7. Margin equals Stockholders' Equity divided by Sales. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 12-5 Chapter 12 Segment Reporting and Decentralization 8. 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. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium 9. Residual income is equal to the difference between total revenues and operating expenses. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Medium 10. When using residual income as a measure of performance, it is not meaningful to compare the residual incomes of divisions of different sizes. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy 11. The transfer price used for internal transfers between divisions of the same company can increase or decrease each division's reported profits. Ans: True AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Appendix: 12A LO: 4 Level: Medium 12. For performance evaluation purposes, the lump-sum amount of fixed service department costs charged to an operating department should usually be based on either the operating department's peak-period or long-run average needs....
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This note was uploaded on 12/05/2009 for the course ACC ACC 502 taught by Professor Prof.l.liu during the Spring '09 term at CSU Dominguez Hills.

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Chapter 12 practice quiz answers - Chapter 12 Segment...

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