Which of the Following Is a Limitation of AARR Method

question 42

Multiple Choice

Which of the following is a limitation of AARR method?

• A) It is difficult to compare projects as its result is expressed in dollars and not in percentage terms.
• B) It does not consider income earned throughout a project's expected useful life.
• C) It does not track initial investment.
• D) It does not consider time value of money.

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Definitions:

Deferred Tax Liability

A tax obligation that a company owes but is not required to pay until a future date.

Warranty Expense

Costs that a company incurs to repair, replace, or compensate for faulty products during the warranty period.

Book Income

The income of a business as reported in its financial statements, following the principles of accounting.

Deferred Tax Liability

A tax obligation that arises from temporary differences between accounting and tax calculations, to be paid in the future.