A Company May Prefer to Use Residual Income Over Return

question 228

Multiple Choice

A company may prefer to use residual income over return on investment for performance evaluation because ________.

• A) residual income is a ratio but return on investment is an absolute figure
• B) residual income is more likely to lead to goal congruence than return on investment
• C) residual income is easier to calculate than return on investment
• D) residual income considers three elements but return on investment considers only two elements

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Definitions:

Hereditarianism

The belief that genes and hereditary factors significantly influence a person's traits, characteristics, and abilities.

Environmentalism

A broad philosophy and social movement that seeks to protect and improve the natural environment through changes to environmentally harmful human activities.

Consciousness

The state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, and emotions.

Behavior

Refers to the actions or reactions of an object or organism, usually in relation to the environment.