The Accounting Rate of Return Method Evaluates the Lifetime Return

question 103

True/False

The Accounting Rate of Return method evaluates the lifetime return of an investment,whereas Return on Investment evaluates the annual return of an investment.

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Definitions:

Responsibility Accounting

The process of measuring and reporting operating data by areas of responsibility.

Responsibility Centers

Parts of an organization treated as separate entities for managerial accounting and performance measurement, each responsible for its own revenues, expenses, and investment funds.

Decentralized Business

A business model where decision-making and operational activities are distributed across different locations or departments, rather than centralized in a single location.

Operating Decisions

Decisions that relate to the day-to-day activities of a business, affecting its operational efficiency and effectiveness.