1. Which of the following statements is (are) true regarding the master budget?

(A) A master budget consists of (a) organizational goals, (b) strategic long-range profit plan, and (c) tactical short-range profit plan.

(B) A master budget consists of a budgeted (a) income statement, (b) balance sheet, and (c) stockholders equity statement.

a) Only A is true.

b) Only B is true

c) Both A and B are true.

d) Neither A nor B is true.

2. Assets invested in a responsibility center are included in a performance report of :

(A) Cost Center

(B) Profit Center

a) Only A is true.

b) Both A and B are true.

c) Neither A nor B is true.

d) Only B is true.

3. Which of the following is a weakness of the step method of service cost allocations?

a) Some user departments are ignored.

b) All interdepartmental services are ignored.

c) All intradepartmental services are ignored.

d) The order of service department allocation has to be determined.

e) Computations are more complex than the reciprocal method.

4. Which of the following is not a characteristic of a decentralized organization?

a) Better use of local knowledge

b) Better use of top managements time

c) Reduced response time to environmental changes

d) More decisions made by relatively few individuals