The Northern Division of the Smith Company Had Average Operating

question 47

Multiple Choice

The Northern Division of the Smith Company had average operating assets totaling $150,000 last year. If the minimum required rate of return is 12%, and if last year's net operating income at Northern was $20,000, then the residual income for Northern last year was:

• A) $20,000
• B) $l8,000
• C) $5,000
• D) $2,000

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Definitions:

Natural Ecosystems

Natural ecosystems are biological communities that interact with their physical environment, functioning through naturally occurring processes without significant human intervention.

Dead Organic Material

Non-living plant and animal matter that has not yet decayed, providing nutrients and energy sources for decomposers in ecosystems.

Recycle

The process of collecting and processing materials that would otherwise be thrown away as trash and turning them into new products.

Nutrients

Substances that provide nourishment essential for growth and the maintenance of life.