Which One of the Following Items Would Most Likely Not

question 58

Multiple Choice

Which one of the following items would most likely not be incorporated into the calculation of a division's investment base when using the residual income approach for performance measurement and evaluation? (CMA Adapted)

• A)Fixed assets employed in division operations.
• B)Land being held by the division as a site for a new plant.
• C)Division inventories when division management exercises control over the amount of short-term credit used.
• D)Division accounts payable when division management exercises control over the amount of short-term credit used.

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Definitions:

Wages Expense

The total cost incurred by a business for the payment of wages to employees for a specific period.

Proprietorship

A proprietorship, also known as a sole proprietorship, is a type of business that is owned and run by one individual and where there is no legal distinction between the owner and the business entity.

Liabilities

Liabilities are financial obligations or debts that a company owes to others, to be settled over time through the transfer of economic benefits including money, goods, or services.

Owner's Equity

The total value that the owners or shareholders have invested in a company minus any liabilities.