The Annual Rate of Return Is Computed by Dividing Expected

question 143

Multiple Choice

The annual rate of return is computed by dividing expected annual

• A) cash inflows by average investment.
• B) net income by average investment.
• C) cash inflows by original investment.
• D) net income by original investment.

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Definitions:

Opening WIP Inventory

The value of unfinished goods that a company has at the beginning of an accounting period.

FIFO Method

FIFO Method (First In, First Out) is an inventory valuation method where goods first acquired are the first to be sold or removed, affecting stock and cost of goods sold.

Equivalent Units

A concept in cost accounting used to apportion costs to partially completed goods, calculated by taking the number of completed units plus the equivalent units in the process.

Conversion Costs

The costs incurred in the process of converting raw materials into finished goods, typically including labor and overhead.