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Accounting

Indicate which of the following statements about evaluating investment centers is false.

a) The use of the original cost of plant and equipment as part of operating assets (rather than book value) would help to eliminate the age of equipment as a factor in ROI computations.

b) Residual income as a performance measure encourages managers to accept all investment projects that will benefit the company as a whole.

c) Return on Investment would decrease if the turnover decreases.

d) The use of residual income makes it easy to compare investment centers of different sizes.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M984017

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