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Ratcheting is a budgeting practice that occurs when organizations make managers budget targets harder to achieve in the following year if their current year's actual
Ratcheting is a budgeting practice that occurs when organizations make managers budget targets harder to achieve in the following year if their current year's actual performance is good and easier to achieve in the following year if their current years actual performance is good. In other words, organizations interpret good,performance as a signal that managers can achieve higher performance and respond by making managers budget targets more difficult. Given the definition what is one possible negative consequence of ratcheting? A. For managers who are evaluated based on their performance relative to their budget target, ratcheting reduces their motivation to achieve high performance. B. ratcheting makes targets to difficult in general C. Ratcheting encourages earnings management to increase earning relative to the budget target. D. A and c
A. For managers who are evaluated based on their performance relative to their budget target, ratcheting reduces their motivation to achieve high performance.
B. ratcheting makes targets to difficult in general
C. Ratcheting encourages earnings management to increase earning relative to the budget target.
D. A and c
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