Residual Income Is Calculated as

question 126

Multiple Choice

Residual income is calculated as

• A) operating income - (ROI *average operating assets).
• B) operating income/(ROI *average operating assets).
• C) operating income/(minimum rate of return * average operating assets).
• D) operating income -(minimum rate of return * average operating assets).
• E) (minimum rate of return * average operating assets)/operating income.

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Definitions:

Interest Accrue

The process by which interest is added to the principal sum of a loan or deposit, typically over time.

Instrument Due

This term refers to the date on which a financial instrument, such as a check or note, is payable.

Bearer

A person in the possession of an instrument payable to bearer or indorsed in blank.

Negotiable

Capable of being transferred or modified in terms of agreement or ownership through endorsement or delivery.