Fundementals Of Cost Accounting Seventh Edition-McGraw Hill- ACCT521 CH 12 QUESTIONS Week 6

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Grantham University *

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521

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Accounting

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Apr 3, 2024

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When all members of an organization have agreed to on a common set of objectives, total goal Blank 1 Blank 1 goal , Correct Unavailable congruence Blank 2 Blank 2 congruence , Correct Unavailable exists. (Enter only one word per blank.) Correct Answer  Blank 1: goal  Blank 2: congruence Effective performance measures for investment Blank 1 Blank 1 investment , Correct Unavailable centers or business units include measures of profit and asset usage. (Enter only one word per blank.) Correct Answer  Blank 1: investment Which of the following statements are true? Multiple select question. Performance evaluation systems should reward people when they do the right thing. correct Performance measures should reflect the results of actions that improve organizational performance. correct All actions taken by managers that improve reported performance are beneficial to organizational performance. Reason: Some actions may be detrimental to organizational performance. Correct Answer  Performance evaluation systems should reward people when they do the right thing.  Performance measures should reflect the results of actions that improve organizational performance.

Which of the following statements is true? Multiple choice question. Investment centers are all very similar, regardless of where they exist. It is always best for an organization to compare the performance of its centers to each other. Companies rarely consider encouraging competition among their centers. It is difficult to compare manufacturing centers with centers that provide services. correct Correct Answer It is difficult to compare manufacturing centers with centers that provide services. Giving a manager a budget with instructions not to exceed it Blank______. Multiple select question. helps define the relationship between quality of services and costs is typical for discretionary cost center managers correct is typical for investment center managers can invite suboptimal behavior correct Correct Answer  is typical for discretionary cost center managers  can invite suboptimal behavior The idea that managers should only be held responsible for costs or profits over which they have decision-making authority is the controllability Blank 1 Blank 1 controllability , Correct Unavailable concept. (Enter only one word per blank.) Correct Answer  Blank 1: controllability

The obvious performance measure for a(n) 1 Blank 1 Blank 1 1 , Incorrect Unavailable center is the amount of sales or fees earned. (Enter only one word per blank.) Correct Answer  Blank 1: revenue Issues in evaluating profit center managers include Blank______. Multiple select question. allocated corporate costs correct transfer costs between organizational units correct shared facilities with other units correct calculating revenues earned by the center Correct Answer  allocated corporate costs  transfer costs between organizational units  shared facilities with other units Going beyond setting internal targets and comparing managers to comparable divisions is the purpose of Blank______. Multiple choice question. the controllability concept relative performance evaluation correct the compensation and reward system responsibility accounting Correct Answer relative performance evaluation Effective performance measures for investment centers, commonly called business Blank 1 Blank 1 business , Correct Unavailable unit Blank

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2 Blank 2 unit , Correct Unavailable, include measures of profits and asset usage. (Enter only one word per blank.) Correct Answer  Blank 1: business  Blank 2: units or unit When it comes to managers' pay, contingent Blank 1 Blank 1 contingent , Correct Unavailable compensation is the amount that is based on measured performance. (Enter only one word per blank.) Correct Answer  Blank 1: contingent When evaluating investment center income, Blank______. Multiple choice question. the comparison should always be between investment centers in the same company actual income should never be compared to the target income it may make sense to compare it to an industry competitor correct Correct Answer it may make sense to compare it to an industry competitor Allocating corporate costs to managers who do not have the decision-making authority to influence the costs Blank______. Multiple choice question. is necessary for effective performance evaluation renders the management control system ineffective correct should only be done for investment centers Correct Answer renders the management control system ineffective When a new manager takes over an existing, established division, implementing the controllability concept is Blank______.

Multiple choice question. relatively simple a challenge correct prohibited by GAAP required by GAAP Correct Answer a challenge An effective cost allocation system should Blank______. Multiple choice question. never assign any corporate overhead to divisions assign corporate fixed costs based on actual costs incurred divide corporate overhead equally between all divisions that have decision- making authority ensure the performance of managers who have decision-making authority affecting costs will be measured by the costs correct Correct Answer ensure the performance of managers who have decision-making authority affecting costs will be measured by the costs If a revenue center manager has decision authority over sales or marketing costs, a performance measure option is Blank______. Multiple choice question. evaluating asset usage the contribution of the center correct total costs comparing actual inputs to standard inputs Correct Answer the contribution of the center According to the Treadway Commission report, Blank______. Multiple select question. the forces that give rise to financial fraud exist to some degree in all companies correct

company environment does not impact the occurrence of fraudulent financial reporting unrealistic budgeted profit objectives have been a cause of financial fraud correct financial pressure resulting from bonus plans linked to short-term economic performance can lead to fraud correct too much emphasis on long-term financial performance can lead to fraud Correct Answer  the forces that give rise to financial fraud exist to some degree in all companies  unrealistic budgeted profit objectives have been a cause of financial fraud  financial pressure resulting from bonus plans linked to short-term economic performance can lead to fraud Comparing managers of one division with that of peer group divisions is called relative Blank 1 Blank 1 relative , Correct Unavailable performance Blank 2 Blank 2 performance , Correct Unavailable evaluation. (Enter only one word per blank.) Correct Answer  Blank 1: relative  Blank 2: performance A process designed to provide reasonable assurance that an organization will achieve its objectives is internal Blank 1 Blank 1 internal , Correct Unavailable control Blank 2 Blank 2 control , Correct Unavailable. (Enter only one word per blank.) Correct Answer  Blank 1: internal  Blank 2: control

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When it comes to managers' pay, contingent Blank 1 Blank 1 contingent , Incorrect Unavailable compensation is not directly linked to measured performance. (Enter only one word per blank.) Correct Answer  Blank 1: fixed Allocating corporate costs to managers for the purpose of performance evaluation Blank______. Multiple choice question. may violate the controllability principal correct is appropriate when comparing managers of different divisions should always be done for investment centers should only be done for profit centers Correct Answer may violate the controllability principal By monitoring and reviewing internal controls, internal Blank 1 Blank 1 internal , Correct Unavailable auditor Blank 2 Blank 2 auditor , Correct Unavailable are often a company's first defense against fraud. (Enter only one word per blank.) Correct Answer  Blank 1: internal  Blank 2: auditors, audits, audit, auditing, or auditor Fixed and variable costs are allocated using different allocation bases under a(n) dual Blank 1 Blank 1 dual , Correct Unavailable- rates Blank 2 Blank 2 rates , Correct Unavailable method. (Enter only one word per blank.) Correct Answer  Blank 1: dual  Blank 2: rate or rates

Which of the following statements are true according to the Treadway Commission? Multiple select question. Long-term economic performance goals generally lead to fraud where short- term goals do not. The forces that give rise to financial fraud are rarely seen in large companies. A frequent incentive for financial reporting fraud is the desire to improve stock prices. correct Unrealistic budget pressures, particularly for short-term results, can lead to financial fraud. correct Correct Answer  A frequent incentive for financial reporting fraud is the desire to improve stock prices.  Unrealistic budget pressures, particularly for short-term results, can lead to financial fraud. Which of the following is NOT one of the categories addressed by internal control? Multiple choice question. Reliability of financial reporting. Compliance with applicable laws and regulations. Effectiveness and efficiency of operations. Fair and adequate management compensation. correct Correct Answer Fair and adequate management compensation. A company's first line of defense against fraud is often the Blank______. Multiple choice question. top executives external auditors internal auditors correct

board of directors Correct Answer internal auditors

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