The Accounting Rate of Return Is Calculated As

question 13

Multiple Choice

The accounting rate of return is calculated as:

• A)initial investment divided by annual net income.
• B)initial investment divided by required rate of return.
• C)annual net income divided by initial investment.
• D)annual net income divided by required rate of return.

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Definitions:

Statement of Cash Flows

An accounting statement detailing collective cash receipts from operational businesses and external investments, plus cash expenses for business and investment activities over a designated period.

Operating Activities

Operating Activities involve the core business processes and transactions related to producing and delivering goods and services, typically reflected in the cash flow statement.

Indirect Method

A method used in cash flow statements to adjust net income for non-cash transactions and changes in working capital to determine the net cash flow from operating activities.

Statement of Cash Flows

A financial statement that provides an aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.