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AICPA Exam CPA-Business Topic 1 Question 53 Discussion
Actual exam question for
AICPA's
CPA-Business exam
Question #: 53
Topic #: 1
[All CPA-Business Questions]
Topic #: 1
The selection of the denominator in the return on investment (ROI) formula is critical to the measure's effectiveness. Which denominator is criticized because it combines the effects of operating decisions made at one level of the organization with financing decisions made at another organization level?
Suggested Answer:
D
Choice 'd' is correct. Shareholders' equity is the ROI denominator that has been criticized because it combines the effects of operating decisions made at another organization level.
Choices 'a', 'b', and 'c' are incorrect, per the above Explanation:.
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