What Disadvantage Is There in Using ROI And/or RI as Performance

question 149

Multiple Choice

What disadvantage is there in using ROI and/or RI as performance measures?

• A)A manager's bonus will decrease when ROI decreases.
• B)ROI may decrease when business expands if income does not increase in line with the new investment.
• C)RI and ROI are both single-period measures.
• D)RI is measured in absolute dollars but ROI is in percentages.
• E)Imputed costs that are deducted in the RI calculation, are not recognized in accrual accounting, and are therefore not included in the operating figure used in calculating ROI.

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Definitions:

A-not-B Error

A cognitive error observed in infants where they search for an object where it was previously found rather than its new location after observing it being moved.

Object Permanence

Object permanence is the understanding that objects continue to exist even when they cannot be seen, heard, or otherwise sensed, a crucial milestone in cognitive development during infancy.

Hiding Place

Hiding Place denotes a location where someone or something can be concealed, often used either in games such as hide-and-seek or in serious contexts such as protection from danger.

Alphabet

A set of written symbols or characters representing the basic sounds of a language, used in the systematic organization of writing.