alleryStart learning →Some organizations define the investment base as operating assets, while others use:
AAverage operating assets
BAverage operating auditors
CApproved operating agendas
DAssorted operating accounts
Answer & Solution
Correct answer: A. Average operating assets
1. The denominator of ROI is not defined identically everywhere.
2. One choice is the operating assets figure itself.
3. The other choice is the average operating assets over the period.
4. The definition has to be stated before ROI figures can be compared.
_Source: OpenStax Principles of Accounting Volume 2, Managerial Accounting (CC BY-NC-SA 4.0), Ch 9 'Responsibility Accounting and Decentralization', sections 9.1-9.4_
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