Which of the following statements regarding responsibility accounting systems is true! O Residual income is best used when evaluating the performance of profit centers rather than investment centers. An advantage of using return on investment to evaluate performance is that it encourages managers to increase both operating assets and operating income. O The use of residual income as a performance measure may lead segment managers to reject investments in projects that would be favorable for the company as a whole. Residual income is a less effective metric for evaluating performance if there are significant difference in the size of the operating segments. None of the above statements is true.
Which of the following statements regarding responsibility accounting systems is true! O Residual income is best used when evaluating the performance of profit centers rather than investment centers. An advantage of using return on investment to evaluate performance is that it encourages managers to increase both operating assets and operating income. O The use of residual income as a performance measure may lead segment managers to reject investments in projects that would be favorable for the company as a whole. Residual income is a less effective metric for evaluating performance if there are significant difference in the size of the operating segments. None of the above statements is true.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter14: The Balanced Scorecard And Corporate Social Responsibility
Section: Chapter Questions
Problem 1TIF
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