Multiple Choice Questions

1. A cost center is a unit of a business that incurs costs but does not directly generate revenues. Which of the following would definitely not be considered a cost center? A. Accounting department. B. Purchasing department. C. Research department D. Advertising department. E. All of these could be considered cost centers.

2. A unit of a business that not only incurs costs, but also generates revenues, is called a: A. Performance center. B. Profit center. C. Cost center. D. Responsibility center. E. Expense center.

3. Regardless of the system used in departmental cost analysis: A. Direct costs are allocated, indirect costs are not. B. Indirect costs are allocated, direct costs are not. C. Both direct and indirect costs are allocated. D. Neither direct nor indirect costs are allocated. E. Total departmental costs will always be the same.

4. An accounting system that provides information that management can use to evaluate the profitability and/or cost effectiveness of a department's activities is a: A. Departmental accounting system. B. Cost accounting system. C. Service accounting system. D. Revenue accounting system. E. Standard accounting system.

5. Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called: A. Direct expenses. B. Indirect expenses. C. Controllable expenses. D. Uncontrollable expenses. E. Fixed expenses.

6. Costs that the manager has the power to determine or at least strongly influence are called: A. Uncontrollable costs. B. Controllable costs. C. Joint costs. D. Direct costs. E. Indirect costs.

7. Responsibility account performance reports: A. Become more detailed at higher levels of management. B. Become less detailed at higher levels of management. C. Are equally detailed at all levels of management. D. Are useful in any format. E. Are irrelevant.

8. Which of the following is an example of a performance measure of internal business processes which would be found in a balanced scorecard? A. Product defect rates B. Number of new customers C. Employee satisfaction D. Return on Investment E. Sales growth

9. Which of the following is an example of a performance measure of the customer perspective which would be found in a balanced scorecard? A. Product defect rates B. Number of new customers C. Employee satisfaction D. Return on Investment E. Sales growth