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CMA Intermediate · Management Accounting · Divisional Performance Measurement

Under the Balanced Scorecard, which of the following is the main reason for including non-financial measures such as customer satisfaction and employee skills alongside financial measures?

Non-financial measures are included because they act as leading indicators of future financial performance. They balance the short-term focus of financial results by capturing the drivers of long-term success, but they supplement rather than replace financial measures.

  1. AThey are leading indicators of future financial performanceCorrect
  2. BThey remove the need for any financial measures
  3. CThey are required by the Companies Act for divisional reports
  4. DThey are always easier to quantify than profit

Explanation

The scorecard complements lagging financial results with drivers such as customer and learning measures that signal future performance, discouraging short-termism. It does not replace financial measures, is not a statutory requirement, and non-financial data are often harder to quantify.

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