If Support Department Allocations Are Used to Motivate Managers to Be

question 14

Multiple Choice

If support department allocations are used to motivate managers to be more efficient:
I. The managers must believe the allocation system is fair
II. The managers should choose the allocation bases
III. It is not important that managers understand how the allocations are made

• A) I only
• B) I and III only
• C) II and III only
• D) II only

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Definitions:

Additional Paid-in Capital

The excess amount paid by investors over and above the par value of the shares during the issuance of stock.

Total Assets

The cumulative total of all a company's assets, both current and non-current.

Stockholders' Equity

The portion of the balance sheet that represents the capital received from investors in exchange for stock, plus retained earnings or losses.

Common Stock

Equity security that represents ownership in a corporation, with holders typically having voting rights and potential dividends.