1. The Sarbanes-Oxley Act of 2002 requires that management of publicly traded companies: report on the adequacy of the company's internal controls over financial reporting. use investment centers to evaluate top managers. compensate managers with fixed compensation plans only. eliminate stock options for managerial compensation.

2.

In general, there is a direct relationship between the quality of the information provided to managers and the quality of decisions made using that information. True False

3.

An operating unit of an organization is called a profit center if it is responsible: only for revenues. for investments in assets. for costs and revenues. only for costs.

4.

Properly designed management control systems have both fixed compensation and contingent compensation. True False

5.

Controllable revenue is included in a performance report of a:

Option b Option d Option c Option a

6.

Internal controls include all of the following except: requiring management authorization for the use of a company's assets. reconciling various sets of books. requiring employees to take vacations. using contingent compensation plans.

7.

When managers are held responsible for costs but the input-output relationship is not well specified, a(n) ___________ is established. standard cost center asset center revenue center discretionary cost center

8.

Properly designed management control systems will eliminate fraudulent behavior by maximizing goal congruence within the organization. True False

9.

The controllability concept states that managers should be held responsible for: costs and revenues, but not investments in assets used in their