A Responsibility Report Should

question 154

Multiple Choice

A responsibility report should

• A) be prepared in accordance with generally accepted accounting principles.
• B) show only those costs that a manager can control.
• C) only show variable costs.
• D) only be prepared at the highest level of managerial responsibility.

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Definitions:

Goodwill

Represents the intangible asset arising when a company acquires another business for more than the fair value of its net identifiable assets.

Equity Method

An accounting technique used when an investing company holds significant influence over the investee but does not have full control over it, involving the recognition of income on the investment based on the investee’s net income.

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an asset that has not been sold.

Intercompany Sales

Transactions involving the exchange of goods or services between subsidiaries within the same parent company.