Residual Income Is Used as a Performance Measure in Which

question 165

Multiple Choice

Residual income is used as a performance measure in which of the following types of centers?

• A)yes no yes
• B)yes yes yes
• C)no yes yes
• D)no yes no

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Definitions:

Accrual Basis

A system in bookkeeping where earnings and expenses are documented at the point of transaction, not necessarily when cash exchanges hands.

Cash Basis

An accounting method that recognizes revenues and expenses only when cash is received or paid, as opposed to the accrual basis accounting.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life, reflecting wear and tear, obsolescence, or loss of usefulness.

Plant And Equipment

Plant and Equipment refer to the long-term assets used in the operation of a business, excluding buildings or real estate, that contribute to the production process.