Which of the Following Is a Disadvantage of Both Residual

question 102

Multiple Choice

Which of the following is a disadvantage of both residual income and ROI?

• A)They are both absolute measures of return.
• B)They are both difficult to calculate.
• C)They both do not discourage myopic behavior.
• D)All of these are disadvantages of both ROI and residual income.

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Definitions:

Liabilities

Obligations owed by a business to individuals or other entities, ranging from loans and mortgages to accounts payable.

Continuity Assumption

An accounting principle that assumes the business will continue operating indefinitely, not being forced to cease operations or liquidate.

Foreseeable Future

A time period in which an event or action is predicted or expected to occur.

Economic Benefits

The advantages or gains received by an individual, company, or society from financial activities or investments.