Chapter 12 Multiple Choice Quiz

Chapter 12 Multiple Choice Quiz - 1 INCORRECT A segment of...

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1 INCORRECT A segment of a business responsible for both revenues and expenses would be referred to as: A) a cost center. B) an investment center. C) a profit center. D) residual income. Feedback: The correct answer is C (Learning Objective 1): A business segment whose manager has control over cost and revenue but has no control over the use of investment funds is known as a profit center. 2 INCORRECT A company's return on investment is computed by: A) dividing its margin by its turnover. B) dividing its turnover by its average operating assets. C) multiplying its margin by its turnover. D) multiplying its margin by its average operating assets. Feedback: The correct answer is C (Learning Objective 2): A company's return on investment is computed by multiplying its margin by its turnover. 3 INCORRECT Which of the following is not considered an operating asset for purposes of calculating return on investment? A) Cash B) Common stock C) Inventory D) Plant equipment Feedback: The correct answer is B (Learning Objective 2): Operating assets include cash, accounts receivable, inventory, plant and equipment, and all other assets held for productive use in an organization. 4 INCORRECT The Southeastern Division of Erie, Inc. recorded operating data as follows for the past year:
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<a onClick="window.open('/olcweb/cgi/pluginpop.cgi? it=jpg::::/sites/dl/free/0077323580/634791/ch12q04_056.j pg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (17.0K)</a> What was the division's return on investment for the past year?
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