A disadvantage associated with the use of the accounting rate of return method for assessing investment opportunities is:

Question

Quizplus · Accepted Answer

Option B states that the accounting rate of return method is based on an accrual approach rather than cash flows, which means it does not consider actual cash inflows and outflows over time. Option C notes that the method does not take into account the time value of money, which is a critical factor in assessing investment opportunities. Therefore, both options B and C are correct, making D the best choice.

A Disadvantage Associated with the Use of the Accounting Rate