In the Current Year,the New Products Division of Testar Company

question 68

Multiple Choice

In the current year,the New Products Division of Testar Company had operating income of $8,000,000 and operating assets of $44,800,000.Testar has set a target return on investment (ROI) of 16% for each of its divisions.Which of the following statements is correct?

• A) The New Products division yielded ROI that was lower than the target ROI.
• B) Residual income for the New Products division was $832,000.
• C) The New Products division yielded no residual income.
• D) All of these are correct.

---

Definitions:

Credit Balance

The amount of money that a company or individual has available in their account, indicating a situation where the total credits exceed the total debits.

Accounts

Financial records of an organization that represent transactions and their effects on its assets, liabilities, and equity.

Chart of Accounts

A structured list of all the accounts in a company’s general ledger, which records all financial transactions.

Journal Entry

A record in the books of accounts that represents a transaction and its effect on various accounts.