Multiple Choice
Which of the following is true about the structure of a corporation?
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1. Introduction to Accounting
Business Organization
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Which of the following does an organizational chart display?
A
The formal lines of authority and responsibility within an organization
B
The inventory levels of the organization
C
The company's annual financial performance
D
The market share of the organization compared to competitors
Verified step by step guidance1
Understand the purpose of an organizational chart: It is a visual representation of the structure of an organization, showing the relationships and hierarchy among different roles and departments.
Identify the key feature of an organizational chart: It primarily displays the formal lines of authority and responsibility within an organization, helping to clarify who reports to whom and the chain of command.
Eliminate incorrect options: Inventory levels, financial performance, and market share are not related to the structural hierarchy or reporting relationships within an organization. These are operational or performance metrics, not structural elements.
Focus on the correct option: The formal lines of authority and responsibility are the defining characteristic of an organizational chart, as it is designed to illustrate the organizational structure.
Conclude that the correct answer is: 'The formal lines of authority and responsibility within an organization,' as this aligns with the purpose and function of an organizational chart.
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