A Unit of an Organization Is Referred to as an Investment

question 66

Multiple Choice

A unit of an organization is referred to as an investment center if it has:

• A) Authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply.
• B) Authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply and significant control over the amount of invested capital.
• C) Authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply.
• D) Authority to provide specialized support to other units within the organization.
• E) Responsibility for developing markets for and selling the output of the organization.

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Definitions:

State Corporation Laws

Regulations established by individual states governing the formation, operation, and dissolution of corporations within their jurisdiction.

Comprehensive Income Items

Components of comprehensive income that represent all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Revaluation Surplus

The increase in value of an asset, over its previously recorded cost, reflected in the financial statements.

Share Premium

The amount received by a company over and above the face value of its shares when issuing them.