The Accounting Rate of Return Is Always the Rate to Use

question 21

True/False

The Accounting rate of return is always the rate to use when finding the profitability of a project.

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Definitions:

Proprietorships

Types of business organizations owned by a single person, where the owner is personally responsible for the business debts and obligations.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, typically including an income statement, balance sheet, and statement of cash flows.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations, calculated as current assets divided by current liabilities.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.