Which of the following statements most accurately describes residual income?
A)how efficiently a division uses its average assets to generate sales there by profits
B)how much operating income the division earns on every dollar of sales
C)how much return a division generates on average assets
D)how much extra income a division generates above the minimum acceptable level

Question

Quizplus · Accepted Answer

Residual income is the income generated by a division or department above the minimum level required to generate an acceptable return on the assets used. It is the amount of income remaining after deducting a company's total cost of capital from its net operating income.

Which of the Following Statements Most Accurately Describes Residual Income