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QUESTION 12 Three measures of investment center performance are income from operations, rate of return on investment, and res

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(Q 12) Three measures of investment center performance are income from operations, rate of return on investment, and residual income.

(ans) TRUE

  • income from operations,rate of return on investments and residual income are used for measuring investment center performance

(Q 13) If divisional income from operations is $100000,invested assets are $850000, and the minimum rate of return on invested assets is 8%,the residual income is $68000

(ans) FALSE

  • The residual income = 100000 - (850000x8%) = 32000

(Q 14) A decentralized business organization is one in which all major planning and operating decisions are made by top management

(ans) FALSE

  • It is the centralized business organization where major planning and operating decisions are made by top management
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