1. Which of the following statements explains why accounting income is useful for calculating executive compensation?

a. accounting income can be calculated separately for each division

b. Accounting income keeps an executive's interests aligned with the owners interests in the long run

c. accounting income represents the true performance of an executive

d. accounting income does not encourage manipulation of earnings

2. A board of directors requires sufficient information to enable intelligent voting of specific matters, to provide perspective on organization in the industry and to effectively monitor the organization. Ensuring that this information is available to the board.

a. allows the board to operate outside of the influence of senior management

b. will prevent the board from accessing confidential information

c. provides efficient guidance to the organization's managers

d. allows the board to manage critical tasks and avoid financial scandals.

3. after analyzing an organization's operations, it was evident that performance varied between departments and that each department worked independently to achieve departmental objectives. The organization would like to improve overall product output which would require improvement from all departments. To achieve this improvement, the organization should

a. develop a wage structure

b. launch an organization wide incentive per day

c. increase the rewards offered to employees in well performing departments

d. introduce cost savings as financial departmental performance measures

4. "Managers are delegated decision making rights over input mix, product mix, sales prices and sales quantities, but investment is determined at a higher level of the firm." This definition refers to the ...................................... responsibility centre

a. investment

b. profit

c. cost

d. revenue