A Responsibility Accounting System Ensures That

question 94

Multiple Choice

A responsibility accounting system ensures that

• A)generally accepted accounting principles reporting requirements are met.
• B)managers will not be held responsible for items they cannot change.
• C)99 percent of businesses utilizing such a system will be profitable.
• D)easy correlations between revenues and costs can be drawn.

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Definitions:

Real Interest Rate

Represents the rate of interest an investor expects to receive after allowing for inflation.

Inflation

The pace at which prices for general goods and services ascend, thus diminishing the capability to purchase.

Real Interest Rate

The interest rate adjusted for the inflation rate, reflecting the real cost of borrowing and the real yield to lenders or investors.

Nominal Interest Rate

The rate of interest before adjusting for inflation, representing the face value of interest payments.