Which of the following statements about residual income is true?
A) Residual income = Operating Income − Sales
B) Residual income = Operating Income − Operating Assets
C) Residual income is the amount of income in excess of a target or desired return on investment
D) None of these answers are correct.

Question

Quizplus · Accepted Answer

Residual income is indeed the amount of net income generated in excess of the minimum rate of return. This concept is used in finance and accounting to assess the excess of actual profit over the expected return on an investment or performance of a business unit.

Which of the Following Statements About Residual Income Is True