Concept explainers
Concept Introduction:
Assets: These are resources which the company owns and will generate future economic benefits. The assets are categorized into fixed asset which will help in generating revenues for long period of time and examples is plant and machinery, building , equipments etc and current assets are resources which will be converted into cash within one year examples are
Return on Investment: It shows the profitability and efficiency of assets in generating revenues. The formula of calculating Return of Investment is given below
It always shown in percentage
Minimum acceptable operating income: The Company provides a target
Residual income: The operating income which is over and above the minimum acceptable operating income is termed as residual income. The formula to calculate is given below
To Prepare:
Calculate Residual income for Thompson Toy Company
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ACCOUNTING PRINCIPLES 122 5/16 >C<
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