When should residual income not be used to compare the performance of two investment centers?


Residual income should not be used to compare the performance of investment centers of different sizes.

Business

You might also like to view...

An auditor who discovers that a client's employees paid small bribes to municipal officials most likely would withdraw from the engagement if:

A. documentation that is necessary to prove that the bribes were paid does not exist. B. management fails to take the appropriate remedial action. C. the client receives financial assistance from a federal government agency. D. the payments violated the client's policies regarding the prevention of illegal acts.

Business

A firm's weighted average cost of capital is a function of 1. the individual costs of capital, 2. the

capital structure mix, and 3 . the level of financing necessary to make the investment. What will be an ideal response?

Business

Which of the following questions should be addressed right after the inputs required for production have been established?

A. What special equipment, facilities, and systems are needed? B. What tasks are required in the production of the output? C. What materials, data, and information are needed? D. What knowledge, skills, and abilities are needed by those performing the tasks? E. What product, information, or service is provided?

Business

In a centralized organizational structure, the ________ department is responsible for developing promotional plans that will be approved by management and recommending a promotions program based on the overall marketing plan, objectives, and budget.

A. product planning B. production C. finance D. auditing E. advertising

Business