What Is a Disadvantage Associated with the Use of the Accounting

question 20

Multiple Choice

What is a disadvantage associated with the use of the accounting rate of return method for assessing investment opportunities?

• A)It is a method that is not widely understood by business.
• B)It is based on an accrual approach rather than cash flows.
• C)It ignores the time value of money.
• D)Both B and C

---

Definitions:

Economic Efficiency

Economic efficiency occurs when a system maximizes its resources to produce optimal quantities of goods and services, thus minimizing waste and inefficiencies.

Monopoly Power

The ability of a firm or entity to control or dominate an industry or sector, enabling it to set prices above competitors without losing significant market share.

Brand Loyalty

The tendency of consumers to continuously purchase one brand's products over competing brands due to perceived satisfaction and quality.

Economic Efficiency

A condition where resources are allocated in a way that maximizes the net benefit to society, meaning no one can be made better off without making someone else worse off.