Question 1

An organizational unit that provides specific tasks for other internal units is referred to as a(n)______________________________.

Accepted Answer

The answer of An organizational unit that provides specific tasks...

Question 2

Which of the following is more characteristic of a decentralized than a centralized business structure?

Accepted Answer

Decentralized business structures are more characteristic of firms that grow very quickly, as they allow for faster decision-making and adaptability by distributing authority across various levels and locations.

Question 3

When the majority of authority is maintained by top management personnel,the organization is said to be

Accepted Answer

When the majority of the authority is maintained by top management personnel, the organization is said to be centralized. This means that decision-making power is held by a small group of individuals at the top of the organization, and lower-level employees have little autonomy or influence in decision-making processes.

Question 4

An organizational unit whose manager is solely responsible for generating revenues is referred to as a ______________________________.

Accepted Answer

The answer of An organizational unit whose manager is solely...

Question 5

The accounting practices that are practiced by a decentralized organization are referred to as ___________________________________.

Accepted Answer

The answer of The accounting practices that are practiced by...

Question 6

An advance pricing agreement can eliminate the possibility of double taxation on multinational exchanges of goods.

Accepted Answer

An advance pricing agreement is a contract between a taxpayer and tax authority that determines an appropriate transfer pricing methodology for the taxpayer's transactions with related parties. This can help prevent disputes and double taxation on multinational exchanges of goods.

Question 7

When one responsibility center uses a transfer price to transfer goods or services to another responsibility center a ___________________________________ is created.

Accepted Answer

The answer of When one responsibility center uses a transfer...

Question 8

Costs of decentralization include all of the following except

Accepted Answer

The costs listed in options A, B, and C are all typical costs associated with decentralization. However, slow response time to changes in local conditions is not a cost of decentralization but rather a potential disadvantage. Therefore, the correct answer is D.

Question 9

The transfer of authority,responsibility,and decision-making rights from the top to the lower level of an organization is referred to as ____________________.

Accepted Answer

The answer of The transfer of authority,responsibility,and decision-making rights from...

Question 10

A binding contract between a company and one or more national taxing authorities that provides the details of how transfer prices will be set is referred to as a(n)_____________________________________________.

Accepted Answer

The answer of A binding contract between a company and...

Question 11

An organizational unit whose manager is responsible for acquiring,using,and disposing of assets in order to maximize return on assets is referred to as a(n)______________________________.

Accepted Answer

The answer of An organizational unit whose manager is responsible...

Question 12

A responsibility center whose manager is responsible for generating revenues and controlling expenses is referred to as a ______________________________.

Accepted Answer

The answer of A responsibility center whose manager is responsible...

Question 13

In a decentralized organization,the cost objective is referred to as a ______________________________.

Accepted Answer

The answer of In a decentralized organization,the cost objective is...

Question 14

An organizational unit that is responsible for the generation of revenues and has no control over selling prices or costs is referred to as a ______________________________.

Accepted Answer

The answer of An organizational unit that is responsible for...

Question 15

Transfer pricing is primarily incurred in

Accepted Answer

Transfer pricing is most commonly associated with decentralized organizations that have multiple divisions or subsidiaries in different countries, as they may transfer goods or services between these entities at artificially high or low prices for tax or other financial benefits. While multinational corporations headquartered in the U.S. may also engage in transfer pricing, it is not exclusive to them. Transfer pricing is less relevant for closely held corporations as they are less likely to have multiple entities in different countries. Foreign corporations exporting their products may also engage in transfer pricing, but it is not the primary context in which transfer pricing arises.

Question 16

A situation in which managers pursue goals and objectives that are in the best interests of a particular segment rather than in the best interests of the organization as a whole is referred to as ____________________.

Accepted Answer

The answer of A situation in which managers pursue goals...

Question 17

An organizational unit that performs management activities,such as personnel services,that benefit the entire organization is referred to as a(n)________________________________________.

Accepted Answer

The answer of An organizational unit that performs management activities,such...

Question 18

In a decentralized company in which divisions may buy goods from one another,the transfer pricing system should be designed primarily to

Accepted Answer

The transfer pricing system should be designed primarily to aid in the appraisal and motivation of managerial performance. It should ensure that division managers make decisions that are in the best interest of the company as a whole, rather than just their division. The transfer price should reflect the market price, so that buying and selling between divisions is done at fair and competitive prices. This helps to motivate the managers to make decisions that benefit the whole company rather than just their own division. A transfer pricing system designed to increase the consolidated value of inventory (A) or minimize the degree of autonomy of division managers (C) would not be effective in achieving this goal. Allowing division managers to buy from outsiders (B) may be beneficial for the company overall, but it is not the primary purpose of the transfer pricing system in a decentralized company where divisions may buy goods from one another.

Question 19

Three types of transfer prices are _________________________,_________________________,and ____________________.

Accepted Answer

The answer of Three types of transfer prices are _________________________,_________________________,and...

Question 20

A responsibility center in which a manger has only the authority to control cost is referred to as a(n)_________________________.

Accepted Answer

The answer of A responsibility center in which a manger...

Quiz 13: Responsibility Accounting,support Department Allocations,and Transfer Pricing