Which of the Following Statements Contrasting Residual Income with Return

question 120

Multiple Choice

Which of the following statements contrasting residual income with return on investment is correct?

• A)ROI may lead to goal incongruence while residual income does not.
• B)ROI is a lagging indicator while residual income is a leading indicator.
• C)Residual income is a financial measure while return on investment emphasizes the customer perspective.
• D)Residual income is a long-term measure while ROI is a short-term measure.

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Definitions:

Percentage-Of-Completion

An accounting method used to recognize revenues and expenses of long-term projects proportionally to the work completed to date.

Cost Recovery

The process of recovering the cost of an investment, expense or other outlay over time.

Statement of Changes

The Statement of Changes outlines the alterations in equity for a specified period, showing how net income and other changes directly affect a company's financial position.

Net Assets

The difference between total assets and total liabilities, representing the owners' or shareholders' equity in a company.