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US CMA Part 1 Responsibility Accounting — practice questions

Explore 23 free Responsibility Accounting questions in US CMA Part 1 Management Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Responsibility Accounting questions and exercises with answers

Showing questions 1–23 of 23.

In a cost center, the manager is held responsible only for:Read the answer and worked solution →In a revenue center, the manager is held accountable only for:Read the answer and worked solution →How many types of responsibility centre are set out?Read the answer and worked solution →Most small businesses are described as having which management structure?Read the answer and worked solution →Which company is given as an example of a centralized management structure?Read the answer and worked solution →Decentralized businesses are typically divided into smaller groups or:Read the answer and worked solution →In a profit center, the manager is responsible for both revenues and:Read the answer and worked solution →An investment center holds its manager accountable for profits and for the:Read the answer and worked solution →A discretionary cost center differs from a cost center because the relationship between costs and output is:Read the answer and worked solution →Return on investment is a segment's profit or loss divided by the:Read the answer and worked solution →Some organizations define the investment base as operating assets, while others use:Read the answer and worked solution →Residual income is designed to encourage segment managers to select projects that benefit:Read the answer and worked solution →A named disadvantage of centralized organizations is a higher risk of:Read the answer and worked solution →Which advantage is named for centralized organizations?Read the answer and worked solution →A named risk of decentralization is that division managers may prioritise:Read the answer and worked solution →Why is consistency hard to ensure in a decentralized organization?Read the answer and worked solution →Which responsibility centre answers for revenues, costs and capital together?Read the answer and worked solution →The purpose of identifying distinguishable segments is efficiency in decision-making and:Read the answer and worked solution →Sort the responsibilitiesRead the answer and worked solution →Centralized or decentralizedRead the answer and worked solution →Knock out the centralized traitsRead the answer and worked solution →Cost centre and revenue centreRead the answer and worked solution →Set the return on investmentRead the answer and worked solution →

Worked practice questions

In a cost center, the manager is held responsible only for:

  1. Costs
  2. Coats
  3. Crops
  4. Clocks
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Correct answer: A. Costs

1. Responsibility centres differ in what the manager is answerable for. 2. The narrowest of them covers only one side of the ledger. 3. A cost center is a segment in which a manager is held responsible only for costs. 4. Revenues are somebody else's concern. _Source: OpenStax Principles of Accounting Volume 2, Managerial Accounting (CC BY-NC-SA 4.0), Ch 9 'Responsibility Accounting and Decentralization', sections 9.1-9.4_

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In a revenue center, the manager is held accountable only for:

  1. Reminders
  2. Revenues
  3. Renewals
  4. Removals
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Correct answer: B. Revenues

1. A revenue centre is the mirror image of a cost centre. 2. It answers for money coming in rather than money going out. 3. A revenue center is a segment in which a manager is held accountable only for revenues. 4. So the answer is revenues. _Source: OpenStax Principles of Accounting Volume 2, Managerial Accounting (CC BY-NC-SA 4.0), Ch 9 'Responsibility Accounting and Decentralization', sections 9.1-9.4_

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How many types of responsibility centre are set out?

  1. Five types
  2. Nine types
  3. Two types
  4. Ten types
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Correct answer: A. Five types

1. The list runs from the narrowest responsibility to the broadest. 2. It covers cost, discretionary cost, revenue, profit and investment centres. 3. That makes five types of responsibility centre in all. 4. So the answer is five. _Source: OpenStax Principles of Accounting Volume 2, Managerial Accounting (CC BY-NC-SA 4.0), Ch 9 'Responsibility Accounting and Decentralization', sections 9.1-9.4_

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