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a. responsibility.
b. authority.
c. accountability.
d. a and b.
e. a., b. and c.
a. revenue centers.
b. cost centers.
c. profit centers.
d. investment centers.
e. responsibility centers.
4. Which concept (or concepts) listed below is (are) consistent with traditional
responsibility accounting?
a. vertical structure.
b. cross functional measurements.
c. bottom up control.
d. a and b.
e. a and c.
5. In relation to the responsibility accounting controversy, goal displacement means
9. Which investment basis (or bases) for the ROI calculation tend (or tends) to cause
managers to dispose of assets too soon?
10. Which investment basis (or bases) for the ROI calculation tend (or tends) to cause
managers to keep assets too long?
12. Which measurement (or measurements) below would tend to favor large divisions over
small divisions if the divisions were ranked?
a. Return on investment.
b. Residual income.
c. Net income.
d. a and b.
e. b and c.
13. The main argument for the use of residual income (RI) as a measure of performance for
investment centers, as opposed to the ROI, is that
a. RI will not cause managers to reject investment alternatives that generate a return
greater than the cost of capital, but lower than the divisions average ROI.
b. RI is a more equitable way to compare different size divisions and different aged
divisions.
c. since RI is an absolute amount, rather than a percentage, the problems associated with
choosing a denominator (gross book value or net book value etc.) are eliminated.
d. RI is simply easier to calculate than ROI.
e. None of these.
15. Standard cost variances are frequently used to evaluate cost centers. Which of these
variances are compatible with lean enterprise concepts?
16. When using a standard cost system, which of the following is not a potential behavioral
problem associated with using material price variances as a single basis for evaluating the
purchasing department?
17. From the statistical control perspective, what is the greatest deficiency associated with
the standard cost control methodology?
a. Standard cost control does not include the statistical concept of variability.
b. Standard cost variances include too much aggregation.
c. Standard cost variances include product cost distortions and cross subsidies.
d. Standard cost control is a constrained optimization technique.
e. None of these.
18. Which type of responsibility center has the greatest amount of autonomy?
a. a revenue center.
b. a cost center.
c. a profit center.
d. an investment center.
e. none of these.
20. Which of the following characteristics is not associated with traditional responsibility
accounting?
22. The characteristics of a responsibility system for a JIT, or lean organization include
a. competition between subsystems.
b. independence of subsystems.
c. cross functional measurements.
d. a and b.
e. a and c.
a. W. Edwards Deming.
b. Eli Goldratt.
c. Peter Senge.
d. H. Thomas Johnson.
e. none of the above.
a. vertical.
b. stovepipe.
c. network.
d. top down.
e. none of these.
28. C. J. McNair has argued that emphasis should be placed on which of the following?
b. authority.
d. investment centers.
4. Which concept (or concepts) listed below is (are) consistent with traditional
responsibility accounting?
a. vertical structure.
5. In relation to the responsibility accounting controversy, goal displacement means
b. assigning responsibility for financial results rather than activities and processes.
9. Which investment basis (or bases) for the ROI calculation tend (or tends) to cause
managers to dispose of assets too soon?
10. Which investment basis (or bases) for the ROI calculation tend (or tends) to cause
managers to keep assets too long?
12. Which measurement (or measurements) below would tend to favor large divisions over
small divisions if the divisions were ranked?
e. b and c.
13. The main argument for the use of residual income (RI) as a measure of performance for
investment centers, as opposed to the ROI, is that
a. RI will not cause managers to reject investment alternatives that generate a return
greater than the cost of capital, but lower than the divisions average ROI.
15. Standard cost variances are frequently used to evaluate cost centers. Which of these
variances are compatible with lean enterprise concepts?
16. When using a standard cost system, which of the following is not a potential behavioral
problem associated with using material price variances as a single basis for evaluating the
purchasing department?
17. From the statistical control perspective, what is the greatest deficiency associated with
the standard cost control methodology?
a. Standard cost control does not include the statistical concept of variability.
18. Which type of responsibility center has the greatest amount of autonomy?
d. an investment center.
20. Which of the following characteristics is not associated with traditional responsibility
accounting?
22. The characteristics of a responsibility system for a JIT, or lean organization include
27. In his article "The third wave breaks on the shores of accounting", Robert Elliott
advocated which type of organizational structure?
c. network.
28. C. J. McNair has argued that emphasis should be placed on which of the following?