ICANManagement InformationPerformance Measurement Basics2020

Which of the following statements CORRECTLY distinguishes between efficiency and effectiveness in performance measurement?

AEfficiency measures whether objectives are achieved; effectiveness measures the cost of achieving those objectives
BEfficiency measures the relationship between inputs used and outputs achieved; effectiveness measures the extent to which objectives are achievedCORRECT
CEfficiency and effectiveness are synonymous terms used interchangeably in management accounting
DEffectiveness relates only to financial performance, while efficiency relates only to non-financial performance
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Why the answer is B, and why the others tempt you.
Efficiency refers to the optimal use of resources — achieving maximum output from minimum input — while effectiveness refers to the degree to which stated objectives or goals are actually achieved. The two concepts are complementary but distinct: an organisation can be efficient without being effective and vice versa. Options A, C, and D contain fundamental mischaracterisations of these concepts.
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