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By Adjusting for a Division's Earning and Accounting for the Cost

question 20

True/False

By adjusting for a division's earning and accounting for the cost of investing in a division,economic value added is a much more accurate estimate of a division's economic performance than are traditional accounting measures of performance.


Definitions:

Single-Step Income Statement

A simplified income statement that calculates net income by subtracting total expenses from total revenues in one step.

Net Operating Income

Net operating income is the total profit of a company after operating expenses are subtracted from gross revenue but before deducting taxes and interest.

Condensed Income Statements

A simplified financial statement that presents a company's net income and revenue summary over a specific period, omitting detailed line items.

Operating Income

Earnings from a firm's core business operations, excluding deductions of interest and tax.

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