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15 Cards in this Set
- Front
- Back
What is responsibility accounting?
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Measurement of management performance based on what they can control.
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In DECENTRALIZED organizations, management control is ususally established by...
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Dividing the organization into segments, responsibility centers.
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Name four types of responsibility centers.
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Cost center, Revenue center, Profit center, Investment center
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What is a cost center?
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Segment of organization where NO REVENUE is generated & the manager is only responsible for costs.
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Give examples of cost centers.
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Service (custodial), staff (personnel), and production centers.
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What is a Revenue center?
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Organizational unit whose manager is responsible only for REVENUES.
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Give examples of revenue centers.
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Sales and Marketing depts
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What is a Profit center?
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Organizational unit whose manager is responsible for REVENUES and COSTS.
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Give examples of profit centers.
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Stores or product lines
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What is an investment center?
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An organizational unit whose manager is responsible for return on investments (revenues, costs, & profit)...the size of the profit in relation to the investment.
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What is responsibility accounting in terms of the accounting field?
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The accounting procedures and reports used to measure the performance of responsibility centers.
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Management uses responsibility accounting to support...
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Goal Congruence
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What is goal congruence?
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When the goals of individual segments/departments meet the goals of the entire organization
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A fundamental concept of responsibility accounting is...
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Controlibility...managers should only be responsible for what they can control.
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Most managers should not be held responsible for which costs?
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Depreciation and Insurance exp
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