Residual income is calculated as
A) Operating profit - (required rate of return × average operating assets)
B) Net profit - (required rate of return × average operating assets)
C) Operating profit - (required rate of return × average equity)
D) Net profit - (required rate of return × average equity)

Question

Quizplus · Accepted Answer

Residual income is calculated by subtracting the product of the required rate of return and average operating assets from the operating profit.

Residual Income Is Calculated as