Residual income equals reported accounting income less the economic cost of the investment used to generate that income.

Name: Residual income equals reported accounting income less the economic cost of the investment used to generate that income.
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Question

Quizplus · Accepted Answer

This is the correct definition of residual income. It takes into account the economic cost of the investment in order to determine the true profitability of the income generated.

Residual Income Equals Reported Accounting Income Less the Economic Cost