Question 1

Which of the following would be considered a profit center?

Accepted Answer

A) A company's accounting department 
B) A company's sales department 
C) A company's product line 
D) A company's operating divisions 
A) A company's accounting department 
B) A company's sales department 
C) A company's product line 
D) A company's operating divisions

Question 2

Which of the following statements BEST describes the responsibilities of the head of an investment center?

Accepted Answer

A) He or she is mainly responsible for controlling costs. 
B) He or she is responsible for maximizing income and using assets efficiently. 
C) He or she is responsible chiefly for achieving as much operating income as possible. 
D) He or she is responsible solely for the efficient and productive use of invested assets. 
A) He or she is mainly responsible for controlling costs. 
B) He or she is responsible for maximizing income and using assets efficiently. 
C) He or she is responsible chiefly for achieving as much operating income as possible. 
D) He or she is responsible solely for the efficient and productive use of invested assets.

Question 3

Which of the following is a relevant performance indicator for the balanced scorecard's learning and growth perspective?

Accepted Answer

A) Earnings per share growth 
B) Revenue growth 
C) Employee access to customer information 
D) Percentage of on-time deliveries 
A) Earnings per share growth 
B) Revenue growth 
C) Employee access to customer information 
D) Percentage of on-time deliveries

Question 4

In a balanced scorecard system, which of the following KPIs would relate to the learning and growth perspective?

Accepted Answer

A) Defect rate 
B) Employee satisfaction 
C) Gross margin growth 
D) Number of repeat customers 
A) Defect rate 
B) Employee satisfaction 
C) Gross margin growth 
D) Number of repeat customers

Question 5

In a balanced scorecard system, which of the following KPIs would relate to the financial perspective?

Accepted Answer

A) Defect rate 
B) Employee satisfaction 
C) Gross margin growth 
D) Number of repeat customers 
A) Defect rate 
B) Employee satisfaction 
C) Gross margin growth 
D) Number of repeat customers

Question 6

The Frito-Lay division of PepsiCo is most likely treated as a(n):

Accepted Answer

A) cost center. 
B) revenue center. 
C) profit center. 
D) investment center. 
A) cost center. 
B) revenue center. 
C) profit center. 
D) investment center.

Question 7

Responsibility accounting performance reports are prepared by which types of business units?

Accepted Answer

A) Cost centers only 
B) Investment centers and revenue centers only 
C) Cost centers, revenue centers, and profit centers 
D) Investment centers only 
A) Cost centers only 
B) Investment centers and revenue centers only 
C) Cost centers, revenue centers, and profit centers 
D) Investment centers only

Question 8

In designing a balanced scorecard, the company begins with company goals, then develops KPIs, and finally, based on the KPIs that are established, the company identifies the company's critical factors.

Accepted Answer

A) True 
 B)False

Question 9

A benefit of decentralization is that it allows top management to concentrate on long-term strategic planning.

Accepted Answer

A) True 
 B)False

Question 10

The manager of a profit center has control of:

Accepted Answer

A) revenues and expenses. 
B) investment decisions and operating income. 
C) revenues and financing decisions. 
D) investment funds. 
A) revenues and expenses. 
B) investment decisions and operating income. 
C) revenues and financing decisions. 
D) investment funds.

Question 11

Which of the following is a lagging indicator?

Accepted Answer

A) Operational performance 
B) Customer satisfaction 
C) Financial performance 
D) Employee training 
A) Operational performance 
B) Customer satisfaction 
C) Financial performance 
D) Employee training

Question 12

Both RI and EVA calculate whether a corporate division generated operating income above the target set by the business, but they do so from different perspectives.

Accepted Answer

A) True 
 B)False

Question 13

The performance measurement system must ensure that managers know the specific goals and targets for the subunits. This statement reflects which of the following performance measurement goals?

Accepted Answer

A) Motivating unit managers 
B) Communicating expectations 
C) Providing feedback 
D) Motivating managers 
A) Motivating unit managers 
B) Communicating expectations 
C) Providing feedback 
D) Motivating managers

Question 14

Based on the variances shown on responsibility performance reports, management must take corrective action on all variances, including favorable, unfavorable, controllable, and uncontrollable variances.

Accepted Answer

A) True 
 B)False

Question 15

For the calculation of EVA, current liabilities are deducted from total average assets for what reason?

Accepted Answer

A) Because liabilities are not included in assets, and so they should be deducted. 
B) Because the current liabilities are due within a one year period. 
C) Because it is necessary in order to calculate the equity of the company. 
D) Because the funds needed to pay the current liabilities will not be available to generate income in the long run. 
A) Because liabilities are not included in assets, and so they should be deducted. 
B) Because the current liabilities are due within a one year period. 
C) Because it is necessary in order to calculate the equity of the company. 
D) Because the funds needed to pay the current liabilities will not be available to generate income in the long run.

Question 16

Which of the following is NOT a potential advantage of decentralization?

Accepted Answer

A) Top management can use their time to concentrate on long-term strategic planning rather than daily operations. 
B) Customer relations are generally improved. 
C) It improves the motivation and retention of division managers. 
D) Decentralization promotes goal congruence and coordination. 
A) Top management can use their time to concentrate on long-term strategic planning rather than daily operations. 
B) Customer relations are generally improved. 
C) It improves the motivation and retention of division managers. 
D) Decentralization promotes goal congruence and coordination.

Question 17

In a balanced scorecard system, which of the following KPIs would relate to the customer perspective?

Accepted Answer

A) Defect rate 
B) Employee satisfaction 
C) Gross margin growth 
D) Number of repeat customers 
A) Defect rate 
B) Employee satisfaction 
C) Gross margin growth 
D) Number of repeat customers

Question 18

Huntswell Corporation has two major divisionsAgricultural Products and Industrial Products. Data for the year just finished is as follows:   For the Agricultural Division, how much is the asset turnover?

Accepted Answer

A) 41.1% 
B) 46.7% 
C) 49.9% 
D) 51.2% 
A) 41.1% 
B) 46.7% 
C) 49.9% 
D) 51.2%

Question 19

Small companies tend to use centralized decision-making because of the smaller scope of their operations.

Accepted Answer

A) True 
 B)False

Question 20

Revenue center performance reports highlight ONLY flexible budget variances, whereas cost center performance reports include sales volume variances.

Accepted Answer

A) True 
 B)False

Exam 24: Performance Evaluation and the Balanced Scorecard

Which of the following would be considered a profit center?

Which of the following statements BEST describes the responsibilities of the head of an investment center?

Which of the following is a relevant performance indicator for the balanced scorecard's learning and growth perspective?

In a balanced scorecard system, which of the following KPIs would relate to the learning and growth perspective?

In a balanced scorecard system, which of the following KPIs would relate to the financial perspective?

The Frito-Lay division of PepsiCo is most likely treated as a(n):

Responsibility accounting performance reports are prepared by which types of business units?

In designing a balanced scorecard, the company begins with company goals, then develops KPIs, and finally, based on the KPIs that are established, the company identifies the company's critical factors.

A benefit of decentralization is that it allows top management to concentrate on long-term strategic planning.

The manager of a profit center has control of:

Which of the following is a lagging indicator?

Both RI and EVA calculate whether a corporate division generated operating income above the target set by the business, but they do so from different perspectives.

The performance measurement system must ensure that managers know the specific goals and targets for the subunits. This statement reflects which of the following performance measurement goals?

Based on the variances shown on responsibility performance reports, management must take corrective action on all variances, including favorable, unfavorable, controllable, and uncontrollable variances.

For the calculation of EVA, current liabilities are deducted from total average assets for what reason?

Which of the following is NOT a potential advantage of decentralization?

In a balanced scorecard system, which of the following KPIs would relate to the customer perspective?

Huntswell Corporation has two major divisionsAgricultural Products and Industrial Products. Data for the year just finished is as follows: For the Agricultural Division, how much is the asset turnover?

Small companies tend to use centralized decision-making because of the smaller scope of their operations.

Revenue center performance reports highlight ONLY flexible budget variances, whereas cost center performance reports include sales volume variances.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, Bonds Payable, and Classification of Liabilities on the Balance Sheet

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

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