The Basic Objective of the Residual Income (RI) Approach to Performance

question 13

Multiple Choice

The basic objective of the residual income (RI) approach to performance measurement of a business unit considered an investment center is to have the investment center maximize its:

• A) Return on investment.
• B) Imputed interest rate charge.
• C) Cash flows.
• D) Cash flows in excess of a desired minimum amount.
• E) Operating income in excess of a desired minimum dollar return.

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Definitions:

Rewards

Benefits, incentives, or compensations received as a result of one's actions or behaviors.

Labeling Theory

The view that reactions of, and characterizations by, others are an essential element in deviance.

Rule-Breaking Behaviors

Actions that violate established guidelines, laws, or social norms.

Deviant

Behavior that violates the norms or expectations of a group or society.