Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Organizations can be categorized by which two main groups?

1. By revenue and by market share

2. By size and by age

3. By composition and by level of decision-making

4. By mission and by vision

The correct answer is: By composition and by level of decision-making

Organizations can indeed be categorized by composition and level of decision-making because these criteria directly relate to how an organization is structured and operates. Composition refers to the various elements that make up the organization, such as the types of departments, teams, or divisions, as well as the diversity of roles within the organization. Understanding the composition helps to clarify the distinct functional areas and responsibilities present in the organization. Level of decision-making is a crucial factor in categorization because it distinguishes between hierarchical structures within an organization, such as strategic, tactical, and operational levels. This classification assists in analyzing how decisions are made, who has the authority to make them, and how these decisions affect overall organizational performance. It provides insight into the governance and leadership practices of the organization, influencing its effectiveness and adaptability in a dynamic environment. The other options do not encompass fundamental aspects of organizational structure and function as directly as composition and decision-making levels do. For instance, revenue and market share focus on financial performance rather than structure, while size and age discuss growth and time rather than the inner workings of the organization. Mission and vision relate to the organization’s purpose and future aspirations but do not specifically address its structural characteristics.