What Is the Primary Shortcoming of the Average Accounting Rate

question 6

Multiple Choice

What is the primary shortcoming of the average accounting rate of return from a financial perspective?

• A)The lack of use in the business world
• B)The lack of a clear-cut decision rule
• C)The degree of the calculation difficulty
• D)The degree of estimation involved with the initial cost
• E)The use of net income rather than cash flows

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Definitions:

Practical Reasoning

The process of figuring out what to do in a given situation, or determining the best course of action based on rational thinking.

Reflectivity

The ability to think about one's own thoughts, feelings, and behaviors critically and analytically.

Wisdom

The ability to think and act using knowledge, experience, understanding, common sense, and insight.

Competence Stage

A phase in the learning process or skill development where an individual gains the ability to perform tasks effectively, yet requires conscious effort to execute.