Successful Operation of a Responsibility Accounting System Requires All of the Following

question 75

Multiple Choice

Successful operation of a responsibility accounting system requires all of the following except:

• A)Budgets prepared for each responsibility center.
• B)The use of a bonus pool based on ROA (return on assets).
• C)An accounting system that measures the performance of each responsibility center.
• D)The preparation of timely performance reports.

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Definitions:

Expected Returns

The anticipated profit or loss from an investment over a specific period, based on historical or projected performance.

Sensitivity Coefficients

Numbers that measure how much a dependent variable changes when an independent variable changes by one unit, often used in financial models to gauge risk.

Single-Index Structure

A model used in finance to describe the performance of assets in relation to a single market index, capturing the proportion of an asset's risk and return that can be explained by the market index.

Expected Returns

The anticipated return on an investment based on historical data or probability-weighted scenarios.