Answer: a. Residual income, like ROI, can encourage a short run orientation
Explanation:
Residual incomes presents the same problem as ROI measurement, The problem of myopic behaviour or short run orientation
The manager may cut expenses like advertising expenses, maintenance expenses , training expenses when being evaluated under residual income or ROI to reflect a favourable residual income or return on investments, The problem Managers being short run orientated is not eliminated or minimized by change methods between ROI and Residual income.
Weight data is your answer
Interest expense is not Incurred on long-term liabilities.
Option i) Incurred on long-term liability.
Interest expenses are not recorded in the balance sheet. It should be recorded in the income statement.
The interest expense is a non-operating expense recorded on the expenses side of the income statement and it does not show as notes payable.
The interest expense is shown as a fixed cost or fixed expense it will be changed as based on the short-term changes or completion of payable.
The interest expense shows a factor in determining a company's borrowing risk.
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Answer:
D. Currency exchange risk
Explanation:
If you must deal with only domestic long term investments, then you should not worry about the currency exchange risk. The currency exchange risk is extremely relevant and important when you are dealing with investments in foreign countries. The currency exchange risk refers to risks associated with the US dollar depreciating or appreciating against other foreign currencies.
