One Disadvantage of Using After-Tax Income as a Performance Measure

question 61

True/False

One disadvantage of using after-tax income as a performance measure of divisional results is that it is an absolute measure which makes it difficult to compare divisions of significantly different sizes.

Grasp the mechanisms through which agency law stimulates business activity.

Identify the types of authority an agent can have and how it affects principal liability.

Comprehend the impact of actual and apparent authority in binding the principal.

Recognize the conditions under which a third party is bound by notifications given to an agent with apparent authority.

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Definitions:

Apparent Authority

Apparent authority refers to a situation where a person appears to have the agent's authority to act on behalf of another (the principal) due to the principal's actions, leading third parties to believe in the existence of such authority.

Manager

An individual responsible for controlling or administering all or part of a company or similar organization.

Contracts

Legal agreements between two or more parties that are enforceable by law.

Unauthorized Acts

Actions taken without the necessary permission or authority, often violating agreements or laws.