Asked by Dylan Gauthier on May 05, 2024
Verified
The manager of an investment center can improve ROI by reducing average operating assets.
ROI
Return on Investment; a performance measure used to evaluate the efficiency or profitability of an investment relative to its cost.
Operating Assets
Assets that are used for the day-to-day functioning of a business and can include cash, inventory, and buildings.
- Realize the value of distinguishing controllable from non-controllable costs in the domain of responsibility accounting.
- Know the structure and classifications within responsibility accounting.
Verified Answer
AW
Alexander WilliamMay 10, 2024
Final Answer :
True
Explanation :
This statement is true as ROI (Return on Investment) is calculated by dividing net income by average operating assets. Therefore, a reduction in average operating assets (while keeping net income constant) would lead to an increase in ROI.
Learning Objectives
- Realize the value of distinguishing controllable from non-controllable costs in the domain of responsibility accounting.
- Know the structure and classifications within responsibility accounting.
Related questions
Policies Regarding When a Difference Between Actual and Planned Results ...
A Cost Item Is Considered to Be Controllable If There ...
In a Responsibility Accounting Reporting System as One Moves Up ...
Cost Centers Profit Centers and Investment Centers Can All Be ...
For Performance Evaluation Purposes, the Actual Fixed Costs of a ...