Which of the Following Is NOT an Advantage of ROI

question 133

Multiple Choice

Which of the following is NOT an advantage of ROI?

• A)It encourages managers of departments with high ROIs to invest in average ROI projects.
• B)It encourages managers to pay careful attention to the relationships among sales, expenses, and investment.
• C)It encourages cost efficiency.
• D)It discourages excessive investment in operating assets.

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Definitions:

Lower Of Cost

An accounting principle that valuates inventory at the lower amount between its original cost and current market value.

Market

A venue where buyers and sellers engage in the trade of goods, services, or securities, affecting prices through supply and demand dynamics.

FIFO Method

The FIFO (First-In, First-Out) method is an inventory valuation strategy where the costs of the oldest inventory items are assigned to the cost of goods sold first.

Inventory Item

An item stored within a company's inventory that is ready or will be ready for sale, including raw materials, work-in-progress, and finished goods.