$-$Managerial performance can be measured in various ways, including return on investment $($ROI$)$ and residual income $($RI$).$ A good reason for using RI rather than ROI is:

Select one:

a$.$ RI can be computed without regard to identifying an investment base

b$.$ Goal congruence is more likely to be promoted by using RI

c$.$ RI is well understood and often used and discussed in the financial press

d$.$ ROI does not take into consideration both the asset turnover $($AT$)$ ratio and the return$-$on$-$sales $($ROS$)$ percentage

e$.$ An imputed interest rate $($minimum rate of return$)$ does not have to be specified

Question text

$-$Which of the following items would most likely not be incorporated into the calculation of a division's investment base when using the residual income $($RI$)$ or the return on investment $($ROI$)$ approach for performance measurement and evaluation?

Select one:

a$.$ Fixed assets used in divisional operations

b$.$ Land being held by the division as a site for a new plant in the future

c$.$ Division inventories when division management exercises control over the inventory levels

d$.$ Division accounts payable when division management exercises control over the amount of short$-$term credit utilized

e$.$ Division accounts receivable with division management exercises control over credit policy and credit terms