Chapter 23 Test Bank

Chapter 23 Test Bank - CHAPTER 23 PERFORMANCE MEASUREMENT,...

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CHAPTER 23 PERFORMANCE MEASUREMENT, COMPENSATION, AND MULTINATIONAL CONSIDERATIONS TRUE/FALSE 1. Many common performance measures, such as customer satisfaction, rely on internal financial accounting information. Answer : False Difficulty : 1 Objective : 1 Terms to Learn : balanced scorecard Customer satisfaction would be obtained by surveys that are not in the financial accounting records. 2. Some companies present financial and nonfinancial performance measures for various organization units in a single report called the "balanced scorecard." Answer : True Difficulty : 1 Objective : 1 Terms to Learn : balanced scorecard 3. A major weakness of comparing two companies using only operating incomes as the basis of comparison is this method ignores differences in the size of the investment required to earn the operating income. Answer : True Difficulty : 1 Objective : 3 Terms to Learn : return on investment (ROI), investment 4. Return on investment is also called the accrual accounting rate of return. Answer : True Difficulty : 1 Objective : 3 Terms to Learn : return on investment (ROI) 5. Investment turnover is calculated by dividing investments by revenues. Answer : False Difficulty : 1 Objective : 3 Terms to Learn : return on investment (ROI) Investment turnover is calculated by dividing revenues by investments. 23-1
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6. The three alternatives for increasing return on investment include increasing assets such as receivables, increasing revenues, and decreasing costs. (In all cases assume that all other items stay the same.) Answer : False Difficulty : 2 Objective : 3 Terms to Learn : return on investment (ROI) Increasing receivables does not increase return on investment. 7. Return on investment is the most popular performance measure when measuring performance in an investment center. Answer : True Difficulty : 1 Objective : 3 Terms to Learn : return on investment (ROI) 8. To evaluate overall aggregate performance, return on investment and residual income measures are more appropriate than return on sales. Answer : True Difficulty : 2 Objective : 3,4 Terms to Learn : return on investment (ROI), residual income residual income (RI) 9. Imputed costs are costs recognized in particular situations that are not usually recognized by accrual accounting procedures. Answer : True Difficulty : 2 Objective : 4 Terms to Learn : imputed cost 10. The objective of maximizing return on investment may induce managers of highly profitable divisions to reject projects that from the viewpoint of the overall organization should be accepted. Answer : True Difficulty : 2 Objective : 4 Terms to Learn : return on investment (ROI) 11. Goal congruence is more likely to be promoted by using return on investment rather than residual income as a measure of a subunit's managerial performance. Answer
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This note was uploaded on 02/27/2012 for the course ACCT 4121 taught by Professor Liu during the Spring '10 term at LSU.

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Chapter 23 Test Bank - CHAPTER 23 PERFORMANCE MEASUREMENT,...

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