The excess of actual operating income over a minimum acceptable operating income is called:
A) net profit.
B) gross profit.
C) non-operating income.
D) residual income.

Question

Quizplus · Accepted Answer

The excess of actual operating income over a minimum acceptable operating income is referred to as residual income. This is considered the amount of income that's earned by a department or an entire organization over its cost of capital. It's also an important measure of how effectively a company's management is using its resources to generate additional profits. Therefore, residual income is used to assess a firm's profitability and evaluate its investments in resource utilization.

The Excess of Actual Operating Income Over a Minimum Acceptable