Economics · Performance Measurement
In management accounting, performance measures can be classified as absolute or relative. Which of the following statements correctly classifies 'Residual Income' and 'Return on Equity'?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Residual income is an absolute measure; Return on equity is a relative measure.✓
- 2Both Residual income and Return on equity are absolute measures.
- 3Both Residual income and Return on equity are relative measures.
- 4Residual income is a relative measure; Return on equity is an absolute measure.
Correct answer
Residual income is an absolute measure; Return on equity is a relative measure.
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