Does Operating Income Best Measure a Subunit's Financial Performance? This

question 128

Multiple Choice

Does operating income best measure a subunit's financial performance? This question is considered part of which step in designing an accounting-based performance measure?

• A)Choose performance measures that align with top management's financial goals.
• B)Choose the time horizon of each performance measure.
• C)Choose a definition for each performance measure.
• D)Choose a measurement alternative for each performance measure.

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Definitions:

T Scores

Standardized scores on psychological and educational tests that have a mean of 50 and a standard deviation of 10, used to compare individual performance against a normative sample.

Sten Scores

Derived from the name “standard 10,” a standard score that is commonly used on personality inventories and questionnaires. Stens have a mean of 5.5 and a standard deviation of 2.

Standard Error of Measurement (SEM)

The standard error of measurement (SEM) is an estimate of the variation in scores due to measurement error, indicating how repeated measures of a person on the same instrument might differ.

T Score

A type of standardized score that has been adjusted to fit a normal distribution, typically with a mean of 50 and a standard deviation of 10.