The congruence problem occurs when:
A) Changes in economic value are not reflected in accounting measures of performance.
B) Managers focus excessive attention on the long run and ignore short-run performance.
C) The performance measurement system lacks vertical integration.
D) Managers confuse corporate strategy with business strategy.

Question

Quizplus · Accepted Answer

The congruence problem arises when there is a mismatch between the economic realities of a company's performance and how these realities are reflected in accounting measures. This can lead to a situation where the financial reports do not accurately represent the economic value created or lost by the company during a period.

The Congruence Problem Occurs When