Question: At Lockhart Inc., divisional managers are evaluated on the basis of a variety of net income measures. The controller informs the president that such measures

At Lockhart Inc., divisional managers are evaluated on the basis of a variety of net income measures. The controller informs the president that such measures could be misleading. What are the major concerns in defining the ‘‘income’’ measures? Are internal or external measures more susceptible to manipulation? Explain.

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