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.

---

Definitions:

Merchandise Sold

The goods that have been sold by a company, typically referring to products sold rather than services rendered.

Gross Profit

The difference between the revenue generated from sales and the cost of goods sold, before accounting for operating expenses, interest, and taxes.

Billings

Billings refer to the total amount of revenue recognized by a company before deducting expenses, often in the context of a professional firm.

Construction In Progress

This refers to the balance sheet classification of the cost of construction projects that are not yet complete.