Which of the Following Statements Most Accurately Describes Residual Income

Multiple Choice

Which of the following statements most accurately describes residual income?

A) It indicates how efficiently a division uses its average assets to generate sales and thereby profits.
B) It indicates how much operating income the division earns on every dollar of sales.
C) It indicates how much return a division generates on average assets.
D) It indicates how much extra operating income a division generates above the minimum acceptable level.