Asked by Zitlaly Flores on Apr 30, 2024
Verified
The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is
A) profit margin
B) residual income
C) return on investment
D) gross profit
Residual Income
A measure of the income that exceeds the minimum required return on a company's investments or operations.
Divisional Income
The earnings generated by a specific division or segment of a larger company, used for evaluating the division's financial performance.
Minimum Acceptable
The lowest level or standard that will be considered satisfactory or acceptable.
- Utilize the principles of residual income to assess the performance of a business.
Verified Answer
RE
Roosevelt EmileApr 30, 2024
Final Answer :
B
Explanation :
The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is called residual income. This measure is used to evaluate the performance of a division in generating income above a required minimum return on investment. Profit margin is the ratio of net income to sales. Return on investment is the ratio of income generated by an investment to the cost of that investment. Gross profit is the difference between net sales and cost of goods sold.
Learning Objectives
- Utilize the principles of residual income to assess the performance of a business.