In measuring the performance of a division manager,stockholders' equity should not be used as the amount of invested capital.

Question

Quizplus · Accepted Answer

Stockholders' equity represents the residual interest in the assets of the company after deducting liabilities, and may not reflect the actual amount of capital invested in the division by the company. Other measures such as net assets or invested capital should be used instead.

In Measuring the Performance of a Division Manager,stockholders' Equity Should