Which of the Following Statements Is True of Accrual Accounting

question 139

Multiple Choice

Which of the following statements is true of accrual accounting rate of return (AARR) method and internal rate of return (IRR) method?

• A) AARR method calculates the return in absolute terms, whereas IRR method calculates the result in terms of percentage.
• B) The AARR method calculates the return using operating-income numbers after considering accruals and taxes, whereas the IRR method calculates the return using after-tax cash flows and the time value of money.
• C) The AARR method calculates the return considering the time value of money, whereas the IRR method calculates the return ignoring the time value of money.
• D) The AARR method considers cash flows, whereas the IRR method considers operating income.

---

Definitions:

Intragroup Transactions

Transactions that occur between entities within the same group of companies, often for the purpose of internal record-keeping or consolidation purposes.

NCI

Stands for Non-Controlling Interest, which represents the portion of equity in a subsidiary not attributable to the parent company.

Inventories

Properties or goods designated for transaction in the usual operations of a business, those under production aimed at such transactions, or as components and inventories to be utilized in the manufacturing process or service delivery.

Non-Current Assets

Long-term assets that are expected to provide economic benefits beyond the next fiscal year, such as property, plant, and equipment.