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Horngren'S Financial And Managerial Accounting
Found in: Page 1355

Short Answer

Explain the difference between a centralized company and a decentralized company.

The act of solidifying control and specialist within the hands of top administration is known as centralization. Decentralization, on the other hand, portrays the top-down exchange of specialists to functional-level administration.

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Step by Step Solution

Meaning of Centralized Company

Top-down decision-making is fundamentally favoured in centralized organizational structures. One individual or an official group must endorse all suitablechoices and be communicated through numerous levels of administration.

Difference between a centralized company and a decentralized company.

The owner or senior management makes all planning and managing decisions in a small business. Small businesses are commonly considered centralized since doing so is more straightforward given the scale of their activities.

Decentralized companies divide their activities into many sections or departments. Geographical (domestic and international), the client (commercial and residential), product (motorcycles and all-terrain vehicles), company function (sales and service), or another business attribute may be the basis for decentralization.

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