CPA-BUSINESS practice question 13 of 35
The basic objective of the residual income approach of performance measurement and evaluation is to have a division maximize its:
Full set: 530 questionsCorrect Answer:
D. Income in excess of a desired minimum amount.
Explanation
Choice "d" is correct. Residual income is defined as income in excess of a desired minimum return. Choices "a" and "b" are incorrect, as residual income is not a "rate" of return; it is a dollar amount. Choice "c" is incorrect, as residual income is an accrual method.
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