ACCT 2102 Test 3 Questions With
Correct Answers
True/ False: if a company's operations are decentralized, only the top-level
management group is allowed to make decisions - ANSWER False
True/ False: the production manager is held responsible for all direct material
and direct labor variances - ANSWER False
True/ False: Companies are typically decentralized along product lines, by
geographic regions, or through responsibility centers - ANSWER True
True/ False: An increasing days' sales in receivables ratio, on average, indicates
that it is taking a company longer to collect its credit sales - ANSWER True
What statement best explains an inventory turnover ratio of 24 - ANSWER On
average, the company is selling and replacing its inventory 24 times during a
year
True/ False: an increasing debt to equity ratio would indicate that a company is
financing more its operations with equity than in the past - ANSWER False
Which of the following is not an advantage of decentralization? - ANSWER The
potential for the duplication of costs and efforts is eliminated
True/ False: A responsibility center is a segment for which the manager is held
responsible for certain activities - ANSWER True
Which of the following describes a profit center? - ANSWER Management is
ONLY held responsible for generating revenue and controlling costs
Which of the following statements describes a favorable variance? - ANSWER
Actual revenue was higher than expected and actual expenses were lower than
expected
True/ False: Management by exception dictates that only unfavorable variances
be investigated - ANSWER False
Which of the following correctly calculates segment margin? - ANSWER Sales
Revenue- Variable Costs- Traceable Fixed Costs
Correct Answers
True/ False: if a company's operations are decentralized, only the top-level
management group is allowed to make decisions - ANSWER False
True/ False: the production manager is held responsible for all direct material
and direct labor variances - ANSWER False
True/ False: Companies are typically decentralized along product lines, by
geographic regions, or through responsibility centers - ANSWER True
True/ False: An increasing days' sales in receivables ratio, on average, indicates
that it is taking a company longer to collect its credit sales - ANSWER True
What statement best explains an inventory turnover ratio of 24 - ANSWER On
average, the company is selling and replacing its inventory 24 times during a
year
True/ False: an increasing debt to equity ratio would indicate that a company is
financing more its operations with equity than in the past - ANSWER False
Which of the following is not an advantage of decentralization? - ANSWER The
potential for the duplication of costs and efforts is eliminated
True/ False: A responsibility center is a segment for which the manager is held
responsible for certain activities - ANSWER True
Which of the following describes a profit center? - ANSWER Management is
ONLY held responsible for generating revenue and controlling costs
Which of the following statements describes a favorable variance? - ANSWER
Actual revenue was higher than expected and actual expenses were lower than
expected
True/ False: Management by exception dictates that only unfavorable variances
be investigated - ANSWER False
Which of the following correctly calculates segment margin? - ANSWER Sales
Revenue- Variable Costs- Traceable Fixed Costs
