​Which of the Following Is FALSE

question 94

Multiple Choice

​Which of the following is FALSE?

• A)​Maximizing division profits can sometimes lead to reducing company-wide profits
• B)Managers of profit centers are never given any discretion in their decision making
• C)Profit centers usually largely run themselves
• D)​A manager being rewarded on division revenues has the most incentive to make good decisions for his division

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor’s share of the investee’s net income or loss.

Initial Value Method

An accounting approach that records investments at their original purchase cost, without adjusting for changes in market value.

Partial Equity Method

An accounting technique used for investments where the investor has significant influence but does not fully control the investee, recognizing income proportionate to the level of ownership.

Equity Method

An accounting technique used to record investments in which the investor has significant influence but no control over the investee, recognizing the investor's share of the investee's profits and losses.