Residual Income Is Calculated by Subtracting the Minimum Acceptable Return

question 21

True/False

Residual income is calculated by subtracting the minimum acceptable return on the average invested capital from the operating income.

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Definitions:

Share Draft Account

A type of checking account in credit unions that allows the account holder to access funds through checks (drafts) or electronic means.

Checking Account

Money stored in an account at a bank or other financial institution that can be withdrawn without advance notice; also called a demand deposit.

Credit Union

A member-owned financial cooperative that provides traditional banking services, like loans and savings accounts, with profits returning to members in the form of reduced fees and higher savings rates.