Question

Since investment center managers have the responsibility and the authority to make decisions that affect not only costs and revenues, but also the assets invested in the center, _____ is used as a performance measure to evaluate their performance. a.unearned revenue b.residual income c.unearned income d.deferred tax

Answer 1

b.residual income

Residual income is excess income generated more than the minimum rate of return. Residual income is a measurement of internal corporate performance, whereby a company's management team evaluates the income generated relative to the company's minimum required return

Responsible for generating profit and for the investment of assets. They will be evaluated bases in their ability to generate enough operating income to justify the investment assets used to generate operating income

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