To Evaluate Overall Performance, Return on Investment and Residual Income

question 54

True/False

To evaluate overall performance, return on investment and residual income measures are more appropriate than return on sales.

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Definitions:

Accounting

The systematic process of recording, analyzing, and reporting financial transactions of a business or individual.

Investment

Allocation of resources, usually money, in the expectation of generating an income or profit.

Available-for-sale Debt Portfolio

A categorization of debt investments not classified as held-to-maturity or trading securities, which can be sold prior to maturity.

Unrealized Loss

A financial situation where an investment holds a lower market value than its purchasing price, yet the investor has not actually sold it to incur a realized loss.