The Question 'Does Operating Profit Best Measure a Subunit's Financial

question 84

Multiple Choice

The question 'Does operating profit best measure a subunit's financial performance?' is considered to be 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:

Deposits in Transit

Funds that have been recorded by a company but not yet by its bank, often due to the timing of bank processing.

Days' Sales Uncollected

A financial metric measuring the average number of days it takes for a company to collect its receivables post-sale.

December 31

The last day of the calendar year, often used as the end date for annual financial reporting.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, showing the net worth and financial health of the business.