Variances between actual and budgeted amounts inform management about performance relative

to the budget.

Answer: True Difficulty: 1 Objective: 7

35. An organization structure is an arrangement of lines of responsibility within the entity.

Answer: True Difficulty: 1 Objective: 8

36. Responsibility accounting focuses on control, not on information and knowledge.

Answer: False Difficulty: 2 Objective: 8

Responsibility accounting focuses on information and knowledge, not on control.

37. The fundamental purpose of responsibility accounting is to fix blame when budgets are not
achieved.

Answer: False Difficulty: 2 Objective: 8

The fundamental purpose of responsibility accounting is to gather information when
budgets are not achieved.