Century Limited Is Preparing a Segmented Income Statement, Subdivided into Departments

question 51

Multiple Choice

Century Limited is preparing a segmented income statement, subdivided into departments (billing, purchasing, and telemarketing) . Which of the following choices correctly describes the accounting treatment of the firm's compensation cost for key executives (president and vice-presidents) ?

• A)The cost is charged to the departments.
• B)The cost is not charged to the departments because, although easily traceable to the departments, it is not controllable at the departmental level.
• C)The cost is not charged to the departments because, although controllable at the departmental level, it is not easily traceable to the departments.
• D)The cost is not charged to the departments because it is both easily traceable to the departments and controllable by the departments.
• E)The cost is not charged to the departments because it is neither easily traceable to the departments nor controllable by the departments.

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Definitions:

Oligarchy

A form of government where power effectively rests with a small number of people, often distinguished by royalty, wealth, family ties, or military control.

Concentrated Power

A situation where a significant amount of authority or power is held by a small number of individuals or organizations.

Bureaucracies

Formal organizations characterized by a hierarchical structure, a clear division of labor, set rules and regulations, and impersonal relationships, aimed at achieving maximum efficiency.

HIV/AIDS Spread

The transmission of the Human Immunodeficiency Virus (HIV) leading to the disease AIDS, affecting the immune system and potentially resulting in life-threatening infections.