Which Departmental Report Is Not Suitable for Use for Responsibility

question 14

Multiple Choice

Which departmental report is not suitable for use for responsibility accounting purposes?

• A) A report that shows no significant variances.
• B) A report that only includes costs controllable by the manager.
• C) A report that the department manager has not participated in preparing.
• D) A report where a share of all the businesses expenses have been allocated to departments.

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Definitions:

Indirect Method

A way of calculating cash flows from operating activities in the statement of cash flows, where net income is adjusted for changes in balance sheet items that affect cash.

Depreciation Expense

Depreciation expense is the allocated amount of the cost of a tangible or physical asset that is expensed over its useful life, reflecting wear and tear or obsolescence.

Gain On Sale

The profit realized when an asset is sold for more than its book value.

Indirect Method

A way of presenting the cash flow statement that adjusts net income for changes in balance sheet accounts to calculate cash flow from operating activities.