One Caveat of Using EVA as a Measure of Performance

question 32

Multiple Choice

One Caveat of using EVA as a measure of performance measurement is managers

• A) may not have incentive to work hard.
• B) may overstate earnings.
• C) may cut back production
• D) none of the above.

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Definitions:

Adjusting Entries

Entries made in journal accounts to correct any discrepancies and ensure that the revenue and expense recognition principles are followed accurately.

Relevant Financial Information

Financial data that is capable of making a difference in business decisions, being timely and having predictive and confirmatory value.

Cash Basis

Cash basis is an accounting method where revenues and expenses are recorded only when cash is received or paid, regardless of when the transactions occurred.

Accounting Period

A specific time period at the end of which an entity prepares financial statements to assess its financial performance and position.