Which of the Following Is Considered to Be a Redeeming

question 131

Multiple Choice

Which of the following is considered to be a redeeming feature of average accounting return analysis?

• A) It incorporates time value of money.
• B) Estimation of the appropriate cutoff rate is straightforward and easy.
• C) Calculation relies on net income and not cash flows or asset values.
• D) Calculation relies on book values and not market values or cash flows.
• E) It is relatively easy to calculate.

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Definitions:

Indirect Materials

Indirect materials are supplies used in the production process that do not become an integral part of the finished product and are not directly traceable to specific goods or services produced.

Raw Materials

The basic materials and inputs used in the production process to manufacture finished goods.

Work in Process

Inventory that includes items being manufactured but not yet completed, representing a stage between raw materials and finished goods.

Raw Materials

are basic substances or components used in the manufacturing process to create finished goods.