Accounting_203_Chapter_10_Test

Accounting_203_Chapter_10_Test - ACCOUNTING 203 Chapter 10...

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ACCOUNTING 203 Chapter 10 Practice Test True and False Questions 1. A contribution income statement is probably the most effective tool for measuring performance in a cost center. 2. Common fixed costs are defined as those fixed costs that can be identified with a particular segment. 3. ROI and residual income are tools used to evaluate managerial performance in profit centers. 4. Net operating income is income after interest and taxes. 5. A change in sales can affect margin and turnover. 6. A profit center is responsible for generating revenue, but is not responsible for controlling costs. Multiple Choice Questions 7. Residual income is a better measure for performance evaluation of an investment center manager than return on investment because: A) the problems associated with measuring the assest base are eliminated. B) desirable investment decisions will not be rejected by divisions that already have a high ROI. C) only the gross book value of assets need to be calculated. D) returns do not increase as assets are depreciated.
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