Which of the Following Is True of Rewarding Managers on the Basis

question 55

Multiple Choice

Which of the following is true of rewarding managers on the basis of residual income?

• A) Managers are paid a fixed amount for his services regardless of the risk involved.
• B) Managers' efforts are easily measured.
• C) Managers taking less risk should be rewarded more since more risk can lead to huge losses.
• D) Managers' rewards are dependent on their own efforts and other local economic factors.

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Definitions:

Fixed Assets

Long-term assets bought for use in the operation of a business, not intended for resale, such as machinery, buildings, and vehicles.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, reducing its book value on the balance sheet.

Buildings

Physical structures owned by a business that are used for operational purposes, considered long-term assets on the balance sheet.

Other Income/Expense

Revenue or costs that are not related to a company's main business operations, such as gains or losses from investments or foreign exchange.