The Accounting Rate of Return Method for Evaluating Proposed Investments

question 56

Multiple Choice

The accounting rate of return method for evaluating proposed investments:

• A)is based on cash receipts and disbursements related to the investment.
• B)uses accounting net income from the operating budget.
• C)does not recognize the time value of money.
• D)is easier to use than the net present value method.

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Definitions:

Routine Maintenance

Regular, scheduled work done on equipment, facilities, or software to keep them running efficiently and prevent breakdowns.

Professional Accounting Body

An organization representing accountants and promoting the standards, ethics, and professional development in accounting.

CPA Australia

A professional accounting body in Australia that provides education, training, and certification for accounting professionals.

IFAC's Code

The ethical code established by the International Federation of Accountants, which sets standards for professionalism and ethics in accounting.