Which of the Following Is the Numerator in the Mathematical

question 98

Multiple Choice

Which of the following is the numerator in the mathematical expression for accrual accounting rate-of-return (AARR) ?

• A) increase in expected average investment
• B) increase in expected average annual after-tax operating income
• C) increase in expected average cash flow
• D) increase in expected net initial investment

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Definitions:

Function

A relation between a set of inputs and allowable outputs, where each input is related to exactly one output.

Compounded Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.

Compounded Continuously

Pertains to the situation where interest is added to the principal balance of an investment, loan, etc., at an infinite number of times within a specified time period.

Balance

The equality between the sum of the debits and credits in an account, or the stability between opposing forces.