What is Decentralization in Accounting? - Definition & Examples


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In accounting, what is the division of an organization into smaller, more manageable units called?

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1. Which of these is a performance reporting system designed to evaluate the performance of the responsibility centers and their respective managers?

2. All of the following are types of responsibility centers. Which is NOT?

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About This Quiz and Worksheet

For this quiz and worksheet combination, you are looking at the concept of decentralization as it appears in accounting. Questions focus on the division of an organization into smaller, more manageable units, as well as two items used to evaluate performance of investment centers.

Quiz and Worksheet Goals

Your understanding of decentralization can be tested by taking the quiz, where you will answer questions about the topics seen here:

  • A performance reporting system used for evaluation of responsibility centers and managers
  • Types of responsibility centers
  • Why performance of a profit center would be evaluated
  • Items used to evaluate performance

Skills Practiced

  • Information recall - remember what you have learned about the basis for performance evaluation in one type of responsibility center
  • Defining key concepts - ensure that you can name the types of responsibility centers
  • Knowledge application - use what you know to answer questions about items used for performance evaluations

Additional Learning

For extra review, click on the lesson titled What is Decentralization in Accounting? - Definition & Examples. There, you can explore the other topics highlighted in this list:

  • Variance
  • Details about the types of responsibility centers
  • Day-to-day operations in a decentralized organization