If Support Department Allocations Are Used to Motivate Managers to Be

question 14

Multiple Choice

If support department allocations are used to motivate managers to be more efficient:
I. The managers must believe the allocation system is fair
II. The managers should choose the allocation bases
III. It is not important that managers understand how the allocations are made

• A) I only
• B) I and III only
• C) II and III only
• D) II only

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Definitions:

Unacceptable Accounting Practices

Methods or practices that are not in accordance with generally accepted accounting principles (GAAP) or ethical standards.

Salvage Value

The estimated resale value of an asset at the end of its useful life.

Stockholders' Equity

Represents the amount of financing provided by the owners of the company and the retained earnings generated by the company's operations.

Paid-in Capital

The total amount of capital that a company has received from shareholders in exchange for shares of stock.