When Using the Accounting Rate of Return,what Is the Basis

question 101

Essay

When using the accounting rate of return,what is the basis for making the decision to make the investment?

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Definitions:

Installment Sales

A sales method allowing customers to make payments over a period of time until the full price is paid.

Gross Profit

A company's total revenue minus its cost of goods sold, indicating the basic profitability of its products or services.

Interest Payments

the regular payments made by a borrower to a lender, typically a percentage of the outstanding debt, as compensation for the loan or credit provided.

Deferred Gross Profit

The portion of gross profit that is not recognized in the current period due to installment sales or revenue recognition policies.