Which of the Following Is Not a Limitation of Using

question 75

Multiple Choice

Which of the following is not a limitation of using the accounting rate of return method for capital budgeting?

• A)The accounting rate of return method does not incorporate time value of money.
• B)The accounting rate of return method is based on accounting income,rather than cash flow.
• C)Net income-on which the accounting rate of return method is based-is more objective than cash flow.
• D)The accounting rate of return method is subject to potential manipulation based on accounting choices made by management (e.g. ,the method used to depreciate a capital asset).

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