Residual Income Is Equal To

question 44

Multiple Choice

Residual income is equal to:

• A) Net income earned above a specified minimum return on assets
• B) Net income divided by average total assets
• C) Average total assets divided by net sales
• D) Net sales divided by net income

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Definitions:

Financial Liabilities

Obligations or debts a company owes to others, which must be paid back, often including loans, bonds payable, and accounts payable.

Note Payable

A written promise to pay a certain amount of money, often including interest, on a specific date or upon demand.

Debt Settlement

A process in which a debtor negotiates with creditors to pay off a portion of their total debt in exchange for the creditor considering the debt as fully repaid.

Land

An asset representing real estate property that a company owns, which can include natural resources or buildings, used in the business operations or as an investment.