Which of the Following Is the Formula for Calculating the Accounting

question 104

Multiple Choice

Which of the following is the formula for calculating the accounting rate of return for a capital asset?

• A)Average annual net cash inflow from asset/amount invested in asset
• B)Average annual operating income from asset/amount invested in asset
• C)(Average annual operating income + depreciation expense)/amount invested in asset
• D)(Average annual cash inflows - depreciation expense)/(amount invested in asset + residual value of asset)

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Definitions:

Excess Supply

A situation where the quantity supplied of a good or service exceeds the quantity demanded at the current price, often leading to a decrease in price.

Money Supply

The full amount of monetary assets in an economy at a particular time, covering cash, coins, and the amounts in checking and savings accounts.

Value of Money

The purchasing power of money, which can vary over time due to factors like inflation or economic conditions.

Vertical Axis

In graphing, the y-axis upon which variables or values are plotted, typically representing dependent measurements in a chart or graph.