All of the Following Are True of a Causal Relationship

question 19

Multiple Choice

All of the following are true of a causal relationship except

• A) It demonstrates covariation
• B) It demonstrates spuriousness
• C) The cause precedes the effect
• D) Elimination of confounding factors

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Definitions:

Residual Income

The income that remains after deducting all required expenses and cost of capital from operating income.

Investment Centers

Segments within a company for which managers have responsibility over cost, revenue, and investment decisions.

Cost Center

A business segment whose manager has control over cost but has no control over revenue or investments in operating assets.

Responsibility Center

Any business segment whose manager has control over costs, revenues, or investments in operating assets.