Using Residual Income as a Measure of Performance Rather Than

question 62

Multiple Choice

Using residual income as a measure of performance rather than return on investment promotes goal congruence because residual income ________.

• A) places importance on the reduction of underperforming assets
• B) calculates a percentage return rather than an absolute return
• C) concentrates on maximizing an absolute amount of dollars
• D) concentrates on maximizing the return on sales