A(n) __________ is a control system that measures performance in terms of after-tax profits minus the cost of capital invested in tangible assets.
A) Open-book management
B) Economic value-added system
C) Activity-based costing
D) Inappropriate control system
E) None of these

Question

Quizplus · Accepted Answer

The economic value-added system (also known as EVA) measures a company's profitability by subtracting the cost of capital invested in tangible assets from the after-tax profits. This provides a more accurate measure of a company's profitability, as it takes into account the true cost of funding its operations. Open-book management involves sharing financial information with employees to improve transparency and engagement, while activity-based costing is a costing methodology that assigns costs to specific activities to better allocate resources. "Inappropriate control system" and "none of these" are not relevant answers.

A(n) __________ Is a Control System That Measures Performance in Terms