Residual Income (RI) May Be a Better Measure for Performance

question 148

Multiple Choice

Residual income (RI) may be a better measure for performance evaluation of an investment center than return on investment (ROI) because:

• A) Problems associated with measuring the asset base are eliminated.
• B) Desirable investment decisions will not be discouraged by high-rate-of-return divisions.
• C) Only the gross book value (GBV) of assets needs to be calculated.
• D) Returns do not increase as assets are depreciated.
• E) The arguments over the appropriate discount rate to use in the calculations are eliminated.

Comprehend the necessity of cash control measures for protecting against theft and misuse.

Analyze bank reconciliation components to adjust the book and bank balances.

Apply knowledge of miscellaneous bank transactions (NSF checks, bank service charges) in reconciling and recording in company books.

Identify and classify adjustments in bank reconciliation.

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Definitions:

Unload Trucks

The process of removing cargo or goods from a truck.

Expressly Prohibits

Refers to a clear and direct prohibition of an action or activity, often found in legal or regulatory contexts.

Assignee's Consent

The agreement or approval given by the party to whom rights or property have been transferred or assigned.

Materially Vary

To change in a significant and substantial way, which can affect the outcome or nature of a contract or agreement.