Many companies assess performance using what are called non-GAAP measures of income. These measures violate generally accepted accounting principles by excluding some items when computing company income while including others. For example, some measures exclude charges for depreciation and amortization. Using such measures is an attempt to overcome:
A) Excessive financial regulation.
B) The congruence problem.
C) Unexpected shortfalls in reported income.
D) Gamesmanship by management.

Question

Quizplus · Accepted Answer

The congruence problem refers to the issue of aligning reported financial performance with the actual economic performance of a company. Non-GAAP measures are often used to provide a more accurate representation of a company's operational success by excluding certain expenses or non-recurring items that may not reflect the ongoing business activities.

Many Companies Assess Performance Using What Are Called Non-GAAP Measures