In a Multidivisional Structure, Corporate Managers Can Compare the Performance

question 22

True/False

In a multidivisional structure, corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates.

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Definitions:

Encumbrance Accounting

An accounting method used mainly by governments that tracks commitments in their budgets, earmarking funds for specific future expenditures.

Purchase Order

A commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.

Decentralized

A system or organization where decision-making authority is distributed among various levels rather than being concentrated at a single point.

Capitalized

The process of recording an expenditure as an asset on the balance sheet, rather than as an expense on the income statement, allowing for depreciation over time.