QUIZ

CHAPTER 9
MULTIPLE CHOICE
1. What is the primary objective of responsibility accounting?
a) To maximize profits
b) To assign costs to responsible individuals
c) To centralize decision-making
d) To minimize costs
2. Which of the following is not a characteristic of a good responsibility accounting system?
a) Clear definition of responsibility centers
b) Accurate measurement of performance
c) Centralized decision-making
d) Timely reporting of results.

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MULTIPLE CHOICE
3. Which of the following is not a type of responsibility center?
a) Cost center
b) Profit center
c) Investment center
d) Revenue center
4. Which of the following performance measures is most appropriate for an investment center?
a) Return on investment (ROI)
b) Contribution margin
c) Variance analysis
d) Budgeted vs. actual costs

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MULTIPLE CHOICE
5. Which of the following is a disadvantage of a decentralized organization?
a) Improved coordination and control
b) Faster decision-making
c) Duplication of efforts
d) Increased employee motivation
6. Which of the following is not a requisite of a good responsibility accounting system?
a) Clearly defined responsibility centers
b) Accurate cost allocation
c) Centralized decision-making
d) Timely performance reporting

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MULTIPLE CHOICE
7. Which of the following is not a characteristic of a good performance report?
a) Focuses on controllable factors
b) Includes both financial and non-financial measures
c) Provides detailed variance analysis
d) Emphasizes short-term results
8. An investment center is
a) Larger than a cost center
b) Larger than a prof it center
c) Seldom the responsibility of a single manager
d) None of the above

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MULTIPLE CHOICE
9. Which measure is commonly used for performance evaluation in an investment center?
a) ROI
b) RI
c) Both
d) None of the above
10. Why is it important to consider a multi-period viewpoint when evaluating performance in an
investment center?
a) To focus on short-term results
b) To accurately evaluate individual investments within the center
c) To compare centers of different sizes
d) None of the above

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MULTIPLE CHOICE
11. How can using both ROI and RI help in evaluating performance in an investment center?
a) It provides a comprehensive view of performance
b) It ensures goal congruence
c) It simplifies the evaluation process
d) None of the above
12. What are some common problems encountered in determining ROI?
a) Multiple calculations leading to different interpretations
b) Lack of data availability
c) Difficulty in calculating net income
d) None of the above

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MULTIPLE CHOICE
13. Why is a flexible budget important to management as a basis of performance measure?
a) It allows for greater control over operations
b) It helps in formulating budgets for different activities
c) It ensures consistent revenue projections
d) None of the above
14. What is a prerequisite for the initiation and maintenance of an effective responsibility
accounting system?
a) A well-defined organization structure
b) Flexible budgeting
c) Random performance reporting
d) Unclear financial responsibilities

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MULTIPLE CHOICE
15. What does an effective responsibility accounting system require for gathering, organizing,
and communicating information about segment activities?
a) Performance evaluation techniques
b) A formal mechanism for information management
c) Unstructured reporting systems
d) Ad hoc decision-making processes
16. Which characteristic is NOT associated with good performance reports?
a) Issuing reports earlier
b) Fitting reports to the organization chart
c) Including excessive data
d) Simplifying and clarifying reports

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MULTIPLE CHOICE
17. Which type of responsibility center is evaluated based on how well costs are controlled?
a) Cost center
b) Profit center
c) Investment center
d) Revenue center
18. In a profit center, what is the major goal of the manager?
a) Maximizing costs
b) Minimizing expenses
c) Maximizing net income
d) Generating fixed revenues

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MULTIPLE CHOICE
19. What technique is used to measure the performance of a cost center?
a) Return on Investment (ROI)
b) Residual Income (RI)
c) Variance analysis
d) Flexible budgeting
20. Which costs are directly incurred by a center and can be eliminated by the elimination of
the center itself?
a) Controllable costs
b) Uncontrollable costs
c) Indirect costs
d) Direct costs

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TRUE OR FALSE
1. Decentralization is a form of organization or management style where the firm requires the
top management to make most decisions, and controls most activities of the organizational
units from the company’s central offices.
2. Most organizations chose a decentralized form of organization as this is found to be more
effective in bigger organizations especially in multinational companies.
3. Enhanced specialization, managers of the organization’s sub units are specialists.
4. Sub-optimization, the measurement system should be used for all divisions.
5. Responsibility Accounting is the system that recognizes various decision centers throughout
an organization and traces cost by areas of responsibility.
6. Managers prepare plans for their areas of responsibility, and exert control tasks.
7. Operating reports is prepared and used to officially communicate expected result and
delegate authority to implement it.
8. Responsibility Accounting is focused on financial reporting by segment or divisions or work
centers.

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TRUE OR FALSE
9. Top management is concerned with the performance of each unit.
10. Centralization is a form of organization where the firm is divided into smaller unit.

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 ANSWERS:

MULTIPLE CHOICE TRUE OR FALSE

1. B 11. A 1. FALSE
2. C 12. A 2. TRUE
3. B 13. B 3. TRUE
4. A 14. A 4. FALSE
5. C 15. B 5. TRUE
6. C 16. C 6. TRUE
7. D 17. A 7. FALSE
8. D 18. C 8. TRUE
9. C 19. C 9. TRUE
10.A 20. D 10. FALSE

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 PREPARED BY: OGMA

TOLEDO

Thank you AMO

MACATIGBAC

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