The Underlying Principle of Allocating Direct Operating Expenses to Departments

question 175

True/False

The underlying principle of allocating direct operating expenses to departments is to assign to each department an amount of expense proportional to the revenues of that department.

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Definitions:

Statistical Conclusion Validity

The degree to which conclusions drawn from statistical analysis accurately reflect the real relationships among variables.

Error Variance

The portion of variability in a set of scores that is not accounted for by the predictor variables in a study, attributable to unknown factors or measurement errors.

Construct Validity

The extent to which a test or experiment measures what it claims to measure.

Hypothetical Construct

An abstract concept that is created for a scientific theory or research and cannot be directly observed.