Pre Post Test 5: Responsibility Accounting

STRATEGIC BUSINESS ANALYSIS PRE POST TEST 5 : Responsibility Accounting Which of the following is NOT a key characteristic of a responsibility center? ANSWER : Centralized decision-making. A division manager is evaluated based on Return on Investment (ROI). Which of the following actions would likely increase ROI? ANSWER : Investing in equipment that reduces manufacturing costs. A company uses Residual Income to evaluate its investment centers. Which of the following statements about Residual Income is TRUE? ANSWER : It considers both the amount of income generated and the investment required to generate that income. Which of the following performance measures is MOST appropriate for a cost center? ANSWER : Variance from budgeted costs A segment of an organization whose manager is accountable for revenues, costs, and investment funds. ANSWER : Responsibility Center A segment of an organization whose manager is accountable for costs only. ANSWER : Cost Center A segment of an organization whose manager is accountable for costs and revenues. ANSWER : Profit Center Any part of an organization for which a manager is accountable. ANSWER : Responsibility Center MIDTERM EXAM STRATEGI BUSINESS ANALYSIS A cost center, evaluated solely on its ability to minimize controllable costs, can strategically prioritize shortterm savings even if it negatively impacts long-term product quality and therefore overall firm profitability. ANSWER : TRUE Decentralization, while potentially improving responsiveness, inherently reduces top management's ability to maintain a consistent strategic direction across all business units. ANSWER : TRUE If a division achieves its budgeted ROI, it automatically signifies that the division's strategic decisions are optimally aligned with the overall company's long-term value creation goals. ANSWER : FALSE Allocating common fixed costs based on usage, while seemingly fair, can strategically incentivize business unit managers to inflate their reported usage, potentially distorting performance evaluations and resource allocation. ANSWER : TRUE A company's balanced scorecard, if perfectly designed, will eliminate all potential conflicts between the perspectives represented (e.g., customer, internal processes, learning & growth, financial). ANSWER : FALSE A performance measure that calculates the difference between operating income and a minimum required return on invested capital. ANSWER : Residual Income (RI) A business unit held accountable for both revenues and costs, but not capital investment decisions. ANSWER : Profit Center A cost that can be significantly influenced by a manager within a specific time period ANSWER : Controllable Cost A comprehensive performance measurement framework that considers financial, customer, internal process, and learning & growth perspectives. ANSWER : Balanced Scorecard A cost that is shared by multiple departments or divisions and is difficult to directly assign to a single unit. ANSWER : Common Cost A performance measure calculated by dividing operating income by invested capital. ANSWER : Return on Investment (ROI) A business unit held accountable for costs only. ANSWER : Cost Center A performance measure that calculates the difference between a company's net operating profit after tax and the total cost of capital. ANSWER : Economic Value Added (EVA) Creating a truly inclusive workplace requires moving beyond mere compliance and fostering a culture of ________ where all employees feel valued and respected. ANSWER : BELONGING Unconscious ________ can lead to biased decision-making in hiring, promotion, and performance evaluations, hindering diversity efforts. ANSWER : BIAS ________ training helps employees recognize and address their own biases, promoting a more equitable work environment. ANSWER : DIVERSITY AND INCLUSION Employee ________ groups provide a platform for individuals with shared characteristics to connect, support each other, and contribute to the organization's diversity initiatives. ANSWER : RESOURCE A diverse workforce can enhance ________ by bringing a wider range of perspectives and ideas to problemsolving and innovation. ANSWER : CREATIVITY Organizations that prioritize diversity often gain a competitive ________ by attracting and retaining top talent from a broader pool. ANSWER : ADVANTAGE Effective diversity management requires strong ________ from leadership to champion inclusion and hold managers accountable. ANSWER : COMMITMENT Metrics related to diversity representation, inclusion, and equity are essential for tracking progress and identifying areas for ________. ANSWER : IMPROVEMENT REGULATORY FRAMEWORK IN BUSINESS TRANSACTIONS PRE POST TEST 5 : GENERAL PROVISION Which of the following is NOT included under "document of title to goods"? ANSWER : Certificate of Occupancy What is the primary purpose of a "document of title to goods"? ANSWER : To serve as proof of possession or control of goods What does the term "order" relate to in documents of title? ANSWER : An endorsement on the document Which of the following is excluded from the definition of "goods"? ANSWER : Money of legal tender A person is deemed insolvent when they: ANSWER : Cannot pay debts as they become due "Quality of goods" refers to: ANSWER : Their state or condition What does "specific goods" mean? ANSWER : Goods identified and agreed upon at the time of contract formation The primary distinction between a contract of barter and a contract of sale is: ANSWER : The consideration (money vs. another thing) At what point is a contract of barter perfected? ANSWER : Upon meeting of minds on the exchange items What happens if a party loses the thing received in barter by eviction? ANSWER : They can recover the item they gave in exchange, if still in possession of the other party What is included in the term "document of title to goods" under Article 1636? ANSWER : Bill of lading Which of the following is NOT considered a "document of title to goods"? ANSWER : Promissory note What does the term "goods" include under Article 1636? ANSWER : Growing fruits or crops A person is deemed insolvent when: ANSWER : They cease to pay debts in the ordinary course of business When are goods considered to be in a "deliverable state"? ANSWER : When the buyer is bound to take delivery under the contract Under Article 1636, "value" in the context of goods refers to: ANSWER : Any antecedent or pre-existing claim, whether for money or not Which legal principle governs immovable property under the provisions of Article 1637? ANSWER : Mortgage Law and Land Registration Law Which of the following is an example of a legal tender? ANSWER : Philippine peso bills What is a "choice in action"? ANSWER : A claim for reparation or right under certain contracts Under Article 1636, "specific goods" are: ANSWER : Goods identified and agreed upon at the time of contract formation PRE POST TEST 6 : NATURE, FORM AND KINDS OF AGENCY What is the essential characteristic of agency as defined in the Civil Code? ANSWER : It is a fiduciary and consensual contract. Who must have the capacity to contract in an agency relationship? ANSWER : Only the principal. Which of the following is NOT a characteristic of an agency? ANSWER : It is perfected by delivery of a juridical act. When does a sale of land made by an agent become void? ANSWER : When both the authority and contract are oral. What distinguishes an agency from a lease of services? ANSWER : The agent’s relationship can be terminated at will by the principal. What is the effect of an agent acting outside the scope of authority? ANSWER : The transaction is unauthorized and unenforceable unless ratified. When does an implied acceptance of agency occur? ANSWER : When the agent begins to act under the authority conferred upon them. What happens when an agent acts without disclosing the principal and issues personal checks? ANSWER : The agent becomes personally liable. What is a special power of attorney required for? ANSWER : To sell immovable property. Which type of agency involves customary gifts for charity or employees? ANSWER : Acts of administration. Which of the following is NOT a requirement for the perfection of an agency contract? ANSWER : Consideration must always be monetary When is a Special Power of Attorney required? ANSWER : To sell a piece of land What is the legal effect if an agent acts within his authority and on behalf of the principal? ANSWER : The transaction binds the principal. Which of the following acts requires a Special Power of Attorney? ANSWER : Making a gift not customary in nature What is the status of a sale when an agent is orally authorized to sell land but fails to put the contract in writing? ANSWER : Void What distinguishes an independent contractor from an agent? ANSWER : An agent is under the control of the principal. If a principal authorizes an agent to sell but does not specify terms, what is the agent presumed to do? ANSWER : Sell at market value. What is the primary duty of an agent toward the principal? ANSWER : To act within the scope of authority. What happens when an agent acts without authority but the principal ratifies the act? ANSWER : The transaction becomes valid from the beginning. If an agent receives payment from a third party on behalf of the principal, the agent is obligated to: ANSWER : Deliver it to the principal. PRE POST TEST 7 : OBLIGATIONS OF THE PRINCIPAL The principal is obligated to indemnify the agent when damages arise due to: ANSWER : The principal's fault or instructions. Which scenario exemplifies "agency by estoppel"? ANSWER : The principal allows the agent to act as though fully empowered. An agent incurs expenses with knowledge of an unfavorable outcome. When is the principal NOT liable for reimbursement? ANSWER : If the principal was unaware of the agent’s knowledge of the outcome. What is required for the principal to be bound by an obligation exceeding the agent’s authority? ANSWER : Ratification by the principal. Which of the following extinguishes an agency? ANSWER : Withdrawal of the agent without notice. When the agency involves an interest of a third party, it can be revoked: ANSWER : Only with the third party’s consent. The death of the principal extinguishes the agency unless: ANSWER : The agency benefits a third person. If an agent withdraws without valid cause, they must: ANSWER : Continue acting until the principal has time to respond. When is the principal NOT liable for the agent's expenses? ANSWER : When the expenses were caused by the agent’s fault. Which of the following implies revocation of the agency? ANSWER : The principal appoints another agent for the same task. Which of the following is NOT an obligation of the principal to the agent? ANSWER : To provide a percentage of the profits made by the agent. When can the principal be bound for an obligation exceeding the agent’s authority? ANSWER : When the principal ratifies it expressly or tacitly. Which of the following acts binds the principal even if the agent acted beyond their powers? ANSWER : When the principal provided instruments signed in blank. What happens when an agent incurs expenses against the principal’s instructions? ANSWER : The agent bears the expenses unless the principal benefits from them. In case of incompatible contracts regarding the same movable object, who gets ownership? ANSWER : The first possessor in good faith. When does ownership of an immovable object belong to the first registrant in good faith? ANSWER : If none of the parties has possession. Which of the following extinguishes an agency by operation of law? ANSWER : Death of the agent. An agency coupled with an interest cannot be revoked because: ANSWER : The agent’s own interest is connected to the agency. When must the agent notify the principal about their withdrawal from the agency? ANSWER : At all times with due notice. What is required for the revocation of an agency to be valid? ANSWER : It must be done in good faith and properly communicated. PRE POST TEST 8 : PROVISIONS COMMON TO PLEDGE AND MORTGAGE What is required for a pledge to be constituted against third persons? ANSWER : It must be made in a public instrument In the case of indivisibility of pledge, what happens when the debt is divided among successors in the interest of the debtor or creditor? ANSWER : The pledge guarantees only the proportionate portion of the debt In a contract of pledge, which of the following statements is true? ANSWER : The creditor has possession of the pledged property but not ownership Which of the following is an example of an accessory contract? ANSWER : A contract of pledge What happens if the thing pledged is lost or destroyed? ANSWER : The pledge is extinguished and the debtor must replace the thing In case of a pledge, who has the right to receive the fruits or income from the pledged property? ANSWER : The pledgee What is the key distinction between a pledge and an antichresis? ANSWER : In a pledge, possession of the property is transferred to the creditor Which of the following is an obligation of the pledgee? ANSWER : To return the pledged property if the debtor pays the debt Which of the following is TRUE regarding the contract of pledge? ANSWER : It requires a written contract to be valid What happens if a pledgee alienates the pledged property with the consent of the pledgor? ANSWER : The pledge is still effective, but the pledgor loses ownership In case of a public sale, who has the right to bid for the pledged property? ANSWER : Both the pledgor and pledgee If the pledged property is sold at a public auction for a lesser amount than the debt, what happens to the deficiency? ANSWER : The pledgor is liable for the deficiency In what case is a contract of pledge considered indivisible? ANSWER : When there are several things pledged, each one guarantees a portion of the debt What happens if the pledgee misuses the pledged property? ANSWER : The pledgor may demand judicial deposit of the property Can a pledgor replace a pledged property with another of the same kind and quality? ANSWER : Yes, if agreed upon by both parties Which of the following statements is FALSE regarding the contract of pledge? ANSWER : The pledgee cannot sell the pledged property without the debtor’s consent What is the nature of the relationship between the pledgor and pledgee? ANSWER : A unilateral contract MIDTERM REGULATORY FRAMEWORK IN BUSINESS TRANSACTIONS What is the principal’s obligation when revoking an agent’s authority to avoid liability? ANSWER : Notify third parties who rely on the agent’s authority In the case study, why is Potline liable for Achong’s actions? ANSWER : GB acted in good faith, unaware of the revocation. If a third party is unaware of an agent’s revoked authority and transacts in good faith, what doctrine applies? ANSWER : Agency by estoppel Which characteristic of agency ensures it is created by mere agreement? ANSWER : Consensual What type of agency is formed when unforeseen circumstances require an agent to act without prior authorization? ANSWER : Agency by necessity Which of the following actions would best represent implied agency? ANSWER : An employee orders supplies for the office without explicit instruction. What happens when an agent acts beyond the scope of their authority? ANSWER : The principal must ratify the actions for them to bind. What distinguishes onerous agency from gratuitous agency? ANSWER : Onerous agency assumes compensation, while gratuitous agency does not. Scenario Analysis: Sarah is authorized to sell John’s house but negotiates the sale of a separate property without consent. The buyer claims John is liable. What principle applies? ANSWER : Unauthorized action Case Evaluation: A principal authorizes an agent to purchase goods and later revokes the authority without notifying suppliers. What risk arises? ANSWER : Third parties may hold the principal liable under estoppel. Application of Doctrine: A ship captain sells cargo during a storm to prevent loss. What type of agency applies? ANSWER : Agency by necessity Critical Thinking: If an agent with a revoked authority completes a contract without notifying the third party, who bears responsibility? ANSWER : The principal due to failure to notify Compare Special and General Agency: ANSWER : Special agency focuses on a single act, while general agency covers broader tasks. What principle governs when an agent's interest makes the agency irrevocable? ANSWER : Coupled with an interest What is necessary for a contract of barter to be consummated? ANSWER : Delivery of goods by both parties What is the primary duty of an agent in a fiduciary relationship? ANSWER : To act in the best interest of the principal When is an agent’s act binding on the principal? ANSWER : When the agent acts within their authority Which of the following best describes a bilateral characteristic of an agency contract? ANSWER : It creates reciprocal duties between principal and agent Which scenario best illustrates agency by estoppel? ANSWER : A third party reasonably believes a person is the agent due to the principal’s conduct. Which type of agency arises from actions or necessity rather than formal agreement? ANSWER : Agency by necessity What is a key requirement for ratification of an agent’s unauthorized act? ANSWER : The principal must be aware of all material facts. Which of the following situations exemplifies a gratuitous agency? ANSWER : A friend agrees to negotiate a contract without expecting compensation. What happens if an agent acts beyond their authority without the principal’s knowledge? ANSWER : The principal may choose to ratify or reject the actions. When is an agency considered irrevocable? ANSWER : When the agent has an interest in the subject matter. What is required for the perfection of a contract of barter? ANSWER : A meeting of the minds on the things to be exchanged Which of the following is the principal's obligation when an agent enters into a contract within their authority? ANSWER : To fulfill obligations as per the contract When must a principal advance funds to the agent? ANSWER : When the agent requests funds to perform their duties What is the principal's responsibility if an agent incurs expenses during their duties? ANSWER : To reimburse the agent, regardless of success, if the agent acted without fault What does indemnifying damages involve in the agency relationship? ANSWER : The principal must compensate the agent for lawful actions performed within their authority. What happens if an agent exceeds their authority but the principal later ratifies the act? ANSWER : The principal becomes bound by the act as though it were authorized from the start. In which situation is the principal still bound by the agent’s actions despite the agent exceeding their authority? ANSWER : In agency by estoppel, where the agent’s authority is presumed Which of the following is true regarding undisclosed limitations on an agent’s authority? ANSWER : The principal is bound even if the agent exceeds authority if the third party is unaware of limitations If a principal gives an agent a blank-signed document, who is responsible for any terms filled in by the agent? ANSWER : The principal is bound by the terms filled in by the agent When is the principal not liable for the agent’s expenses? ANSWER : When the agent’s expenses result from negligence What is the principal's responsibility if the agent acts against their instructions? ANSWER : The principal is not liable for expenses incurred against instructions unless they benefit Which of the following can lead to a principal not being liable for an agent’s expenses? ANSWER : If the agent knowingly acts against the principal’s instructions If an agent incurs expenses and the principal pre-agrees to terms about reimbursement, what happens? ANSWER : The agent must bear the expenses if they exceed the agreed limit In cases involving movable property, who has priority over ownership? ANSWER : The first good-faith possessor Which factor takes precedence in determining ownership of immovable property? ANSWER : The first good-faith registrant Which is a legitimate mode of extinguishing an agency relationship? ANSWER : Completion of the agency’s purpose Which of the following is true about revocation by the principal? ANSWER : It can be prevented if the agency is coupled with an interest When does an agency terminate due to the death or incapacity of the principal? ANSWER : Only when the agency is created for mutual or third-party interest What happens when the purpose of the agency is accomplished? ANSWER : The agency terminates upon completion of its objective Which of the following is NOT a mode of extinguishing agency? ANSWER : Agency by estoppel What happens if an agent resigns from their role without giving notice to the principal? ANSWER : The agent is required to compensate the principal for any damage caused Which of the following actions can cause the agency to terminate? ANSWER : Death of the principal What is a key feature of an agency coupled with an interest? ANSWER : The agent’s interest in the subject matter prevents revocation by the principal What occurs if the principal’s actions create an incompatible contract with the agent? ANSWER : Ownership is determined by good faith possession or registration What happens if the agency’s purpose is to complete a contract that is later rendered impossible due to unforeseen circumstances? ANSWER : The agency may be dissolved Which is NOT a reason for the termination of an agency? ANSWER : The agent retires from their position