In a Profit Center, the Department Manager Has Responsibility for and the Authority

question 207

Multiple Choice

In a profit center, the department manager has responsibility for and the authority to make decisions that affect

• A) not only costs and revenues, but also assets invested in the center
• B) the assets invested in the center, but not costs and revenues
• C) both costs and revenues for the department or division
• D) costs and assets invested in the center, but not revenues

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Definitions:

Fair Value

The compensation for parting with an asset or the financial burden of settling a liability in an orderly market operation as of the measurement checkpoint.

Acquisition Method

An accounting technique used to consolidate the financial statements of two companies when one acquires the other.

Subsidiary's Fair Value

The estimated market value of a subsidiary company if its assets were to be sold or the company were to be acquired as a whole.

Goodwill

A non-physical asset that is recognized when one company purchases another at a price higher than the sum of the net value of its identifiable assets.