Under the Notion of Controllability, It Is Appropriate to Evaluate

question 7

Multiple Choice

Under the notion of controllability, it is appropriate to evaluate the profitability of each investment center based on each center's:

• A) Operating income before tax.
• B) Operating income after tax.
• C) Return on sales (ROS).
• D) Profit earned in relation to the amount of capital invested in the subunit.
• E) Return on equity (ROE).

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Definitions:

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to obtain net cash flow from operating activities.

Operating Activity

Activities that are part of the core operations of a business, including production, sales, and the provision of services.

Statement Of Cash Flows

A financial report that provides a summary of a company's cash inflows and outflows over a specific period.

Dividends Paid

Money distributed to shareholders out of a corporation's earnings as a return on investment.