ACCT 2102 UGA Farmer- Ch 10 | Latest
Update | 2024/2025 | Already Passed
What is decentralization in accounting?
Decentralization refers to the delegation of decision-making authority to lower levels of
management within an organization.
What are the advantages of decentralization?
Dece...
ACCT 2102 UGA Farmer- Ch 10 | Latest
Update | 2024/2025 | Already Passed
What is decentralization in accounting?
✔✔ Decentralization refers to the delegation of decision-making authority to lower levels of
management within an organization.
What are the advantages of decentralization?
✔✔ Decentralization allows for faster decision-making, improves motivation at lower levels, and
enables managers to specialize in their areas of expertise.
Define "responsibility center."
✔✔ A responsibility center is a part of an organization whose manager is responsible for certain
activities and financial outcomes.
What are the three main types of responsibility centers?
✔✔ The three main types are cost centers, profit centers, and investment centers.
What is a cost center?
1
, ✔✔ A cost center is a unit within an organization where the manager is responsible for
controlling costs but not generating revenue.
Explain a profit center.
✔✔ A profit center is a unit within an organization where the manager is responsible for both
generating revenue and controlling costs.
What is an investment center?
✔✔ An investment center is a unit in which the manager is responsible for generating revenue,
controlling costs, and making investment decisions.
What is the role of performance evaluation in responsibility accounting?
✔✔ Performance evaluation helps assess how well managers of responsibility centers meet
financial and operational objectives.
What does "return on investment" (ROI) measure in accounting?
✔✔ ROI measures the profitability of an investment relative to the amount of capital invested.
What is the formula for calculating ROI?
2
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