Question 1

Decentralization is:&#10;A) A major type of responsibility centered within an organization&#10;B) The degree of dispersion of responsibilities&#10;C) The compounding for any given interest&#10;D) Proceeds lost by forgoing other opportunities

Accepted Answer

Decentralization refers to the degree to which decision-making responsibilities are dispersed throughout an organization rather than being concentrated at a single point or within a small group.

Question 2

Advantages of decentralization include:&#10;A) Loss of control&#10;B) Decreased goal congruence&#10;C) Greater speed&#10;D) Lack of managerial talent

Accepted Answer

Decentralization allows for quicker decision-making because decisions are made closer to the point of action, enhancing responsiveness and efficiency.

Question 3

Disadvantages of decentralization include:&#10;A) Increased need for condition and formal communication&#10;B) More efficient use of time&#10;C) More relevant information&#10;D) Higher quality decisions

Accepted Answer

Decentralization can lead to an increased need for coordination and formal communication among various departments or units to ensure that the organization's overall goals are met. This is because different units might be making decisions independently, necessitating a structured approach to communication and coordination.

Question 4

Types of responsibility centers include all but one of the following:&#10;A) Service centers&#10;B) Profit centers&#10;C) Cost centers&#10;D) Managerial talent centers

Accepted Answer

Managerial talent centers are not a recognized type of responsibility center in management accounting or financial management. Responsibility centers are typically classified as cost centers, profit centers, and investment centers, with service centers sometimes considered a subset of cost centers.

Question 5

Measures of performance responsibility centers include:&#10;A) Responsibility&#10;B) Authority&#10;C) Accountability&#10;D) All of the above

Accepted Answer

Measures of performance for responsibility centers include all aspects such as responsibility, authority, and accountability. These elements are crucial for evaluating the performance of different segments within an organization, as they collectively ensure that each center is effectively managed and contributes to the overall goals of the organization. Responsibility centers are evaluated based on how well they manage the resources and responsibilities allocated to them, how effectively they exercise their authority in decision-making, and how accountable they are for their actions and results.

Question 6

Budget variances are:&#10;A) A result of positive revenues&#10;B) The difference between what was budgeted and what actually occurred&#10;C) A budget that accommodates a range of activities&#10;D) A tangible asset pledged to repay a loan

Accepted Answer

Budget variances refer to the difference between budgeted figures and actual figures. This can relate to revenues, expenses, or other financial metrics, and it indicates how closely the budgeted amounts match the real outcomes.

Question 7

Common variances used by health care organizations include&#10;A) Revenue variance&#10;B) Traditional profit center&#10;C) Expense variance&#10;D) a & c

Accepted Answer

Revenue variance and expense variance are common variances used by healthcare organizations to measure financial performance, whereas traditional profit center is not a variance but a method of organizing financial responsibility.

Question 8

Budget variances associated with short term strategies include&#10;A) Revenue enhancement&#10;B) Cost containment&#10;C) Revenue attainment&#10;D) b & c

Accepted Answer

Budget variances associated with short-term strategies include both cost containment (B) and revenue attainment (C). Cost containment strategies are aimed at reducing or controlling expenses, while revenue attainment focuses on achieving targeted income levels.

Question 9

Common complications when using measures to judge financial performance include:&#10;A) Loss of control&#10;B) Greater speed&#10;C) Promotion of short term thinking&#10;D) Efficient use of time

Accepted Answer

Promotion of short-term thinking is a common complication as financial measures often focus on immediate results rather than long-term sustainability.

Question 10

Major employee compensation model which of the following advantages:&#10;A) Income predictability&#10;B) At risk distribution&#10;C) Income contingent on uncontrollable forces&#10;D) No financial incentives

Accepted Answer

Income predictability is a major advantage of many employee compensation models, as it allows employees to plan their finances with the assurance of a steady income.

Question 11

The degree of decentralization has to balance the advantages and disadvantages within a healthcare organization.

Accepted Answer

The answer of The degree of decentralization has to balance...

Question 12

Loss of control is a disadvantage of decentralization.

Accepted Answer

The answer of Loss of control is a disadvantage of...

Question 13

Transfer center is a type of responsibility center.

Accepted Answer

The answer of Transfer center is a type of responsibility...

Question 14

A basic attribute of a responsibility center is authority.

Accepted Answer

The answer of A basic attribute of a responsibility center...

Question 15

The result of a favorable variance is less income received than budgeted.

Accepted Answer

The answer of The result of a favorable variance is...

Question 16

Budget variance measures that are long term promote revenue enhancement.

Accepted Answer

The answer of Budget variance measures that are long term...

Question 17

Cost centers are responsible for providing services and controlling their costs.

Accepted Answer

The answer of Cost centers are responsible for providing services...

Question 18

Budget variances should not occur with approved budgets.

Accepted Answer

The answer of Budget variances should not occur with approved...

Question 19

Cost containment means eliminating certain classes of cost.

Accepted Answer

The answer of Cost containment means eliminating certain classes of...

Question 20

At risk compensation system is based totally on achieving performance goals.

Accepted Answer

The answer of At risk compensation system is based totally...

Deck 11: Responsibility Accounting