The Accrual Accounting Rate of Return Method Has a Significant

question 103

True/False

The accrual accounting rate of return method has a significant weakness for use in making capital budgeting decisions because it does not track cash flows and it ignores the time value of money.

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Definitions:

Disposable Income

Money in hand for households dedicated to saving and spending after navigating through income taxes.

APS

The ratio of savings to income, indicating the proportion of income that is saved rather than spent.

Disposable Income

Spending and saving financial pools available to households subsequent to the application of income taxes.

APC

Acronym generally referring to the Average Propensity to Consume, which is the fraction of income spent on consumption.