True / False Questions
78.Clear lines of authority and responsibility are essential to establishing a responsibility accounting system.
True False
79.Decentralization encourages upper level management to concentrate on short-term decisions.
True False
80.An important disadvantage of decentralization is that managers may engage in suboptimal behavior.
True False
81.Suboptimization refers to actions taken by a manager that are in the best interest of the firm as a whole but not in his/her own best interest.
True False
82.Organization charts are drawn in a hierarchical fashion with low level managers shown at the bottom of the chart, middle level managers in the middle of the chart, and senior level managers shown at the top of the chart.
True False
83.A disadvantage of decentralization is that it fails to motivate managers to improve the productivity of their division.
True False
84.A restaurant that is part of a retail store and managed by the retail manager would most likely be classified as a cost center.
True False
85.Liam manages a division that is part of a large, decentralized business. He has a substantial degree of control over the division's costs, revenues, and investment in assets. Based on this information, the division would be classified as a profit center.
True False
86.Investment centers are often evaluated on the basis of return on investment.
True False
87.In a decentralized firm, a responsibility report should be prepared for investment center managers, but are not useful for profit center managers.
True False