56) Residual income is defined as

A) net income less “imputed” interest.

B) sales less expenses.

C) income divided by revenue.

D) being the same as ROI.

The following information pertains to Jordan Company:

Invested capital


Net income




Imputed interest rate

12 percent

57) The income percentage of revenue is

A) 100 percent.

B) 10 percent.

C) 500 percent.

D) 20 percent.

58) The capital turnover is

A) 2.

B) 5.

C) 10.

D) 1.

59) The return on investment is

A) 10 percent.

B) 50 percent.

C) 20 percent.

D) 12 percent.

60) The residual income is

A) $200,000.

B) $120,000.

C) $ 80,000.

D) $240,000.

The following information pertains to Wolfe Company

Total assets


Total current liabilities


Total expenses


Total liabilities


Total revenues


61) The income percentage of revenue is

A) 75 percent.

B) 25 percent.

C) 200 percent.

D) 40 percent.

62) If invested capital is defined as total assets, the capital turnover is

A) 0.625.

B) 0.160.

C) 0.400.

D) 1.600.

63) Which of the following is NOT a possible definition of invested capital?

A) Total assets.

B) Total assets less current liabilities.

C) Total assets less long-term liabilities.

D) Total assets less total liabilities.

64) Which of the following definitions of invested capital is NOT recommended for measuring the performance of division managers?

A) Total assets

B) Total assets less total liabilities

C) Total assets employed

D) Total assets less current liabilities

65) The original cost of an asset less any accumulated depreciated is referred to as

A) net book value.

B) a net asset.

C) gross book value.


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