Which of the Following Is a Limitation of Using Past

question 20

Multiple Choice

Which of the following is a limitation of using past performance as a basis for judging actual results?

• A) It does not account for productivity increases over the periods.
• B) It increases the incentive for managers to introduce budgetary slack.
• C) It does consider inefficiencies of previous periods.
• D) It increases the tendency of senior managers exaggerating changes in future conditions as opposed to changes in current conditions.

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Definitions:

Past-Due Account

A past-due account is a financial account that has not been paid by the due date, often leading to penalties or interest charges.

Note Receivable

A financial asset representing a written promise for the future receipt of cash, indicating that one party owes another party a specific sum.

Settlement

The process of concluding a transaction or dispute by all parties involved agreeing to terms, often involving the payment of funds.

Promissory Notes

Written promises to pay a specified sum of money to a named party on demand or at a determined future date.