Which Three of the Following Are Drawbacks to Using Accounting

question 2

Multiple Choice

Which three of the following are drawbacks to using accounting figures to judge managerial performance?

• A) Earnings per share growth can lead to loss of value if the time value of money is not accounted for.
• B) Figures for earnings per share are not used by institutional investors as a criterion for judging managerial performance.
• C) Earnings per share growth fails to take account of the investment needed to generate that growth.
• D) Focusing purely on the growth in earnings fails to take account of the risk of those earnings.

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Definitions:

Human Development

The multidisciplinary study of how people grow and change throughout their lives, encompassing physical, cognitive, social, and emotional dimensions.

Ecological-systems Perspective

A theoretical framework in psychology that emphasizes the varying systems of the environment and their impact on individual development, originally developed by Urie Bronfenbrenner.

Psychoanalytic Theorist

An individual who explores and theories about the unconscious motivations that influence human behavior, typically drawing on Freudian concepts.

Developmental Stages

Distinct phases in the life cycle of humans (and other organisms) that are characterized by specific physical, psychological, and cognitive developments.