Which of the Following Statements Regarding Performance Measures Is True

question 118

Multiple Choice

Which of the following statements regarding performance measures is true?

• A)GAAP requires performance measures for all employees.
• B)Companies must select from performance measures published by its own industry when deciding how they want to assess performance.
• C)Employees tend to direct their attention to what is measured and may neglect what is not measured.
• D)Companies need to place emphasis on a single performance measure so employees know what to expect.

---

Definitions:

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period.

Internal Rate

Often referred to as the internal rate of return (IRR), it is the discount rate that makes the net present value (NPV) of all cash flows from a particular project zero.

Net Present Value

A financial metric used to evaluate the profitability of an investment or project, calculated by subtracting the present value of cash outflows from the present value of cash inflows over a period of time.

Payback Period

The amount of time it takes for an investment to generate cash flows sufficient to recover its initial cost.