1. Responsibility reports should be simple, show variances between the budgeted and actual amounts of controllable revenue and expense items, and be timely. True False

2. When a capital investment is expected to provide unequal annual cash inflows, the payback period cannot be calculated. True False

3. Clear lines of authority and responsibility are not necessary to establishing a responsibility accounting system. True False

4. The payback method shows how long will be required to recover the cost of an investment in a capital asset. True False

5. Responsibility reports should be arranged in a manner that promotes management by exception. True False

6. In an optimal responsibility accounting system managers are evaluated on only the revenues and costs that are under their control. True False

7. A restaurant that is part of a retail store and managed by the retail manager would most likely be classified as an investment center. True False