The use of residual income reduces,but does not eliminate,the suboptimization problem.

Name: The use of residual income reduces,but does not eliminate,the suboptimization problem.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The statement is true. Residual income is a performance measurement tool that takes into account the cost of capital and considers only the economic profit generated by a division. However, it does not necessarily reflect the actual economic performance of the whole company, and there may be some suboptimization problems.

The Use of Residual Income Reduces,but Does Not Eliminate,the Suboptimization