The accounting rate of return method uses accrual-based accounting income.

Name: The accounting rate of return method uses accrual-based accounting income.
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The accounting rate of return method calculates the average annual profit estimated over the life of an investment as a percentage of the initial investment. This profit is calculated based on accrual accounting principles, which recognize revenue and expenses when they are incurred, rather than when money is received or paid.

The Accounting Rate of Return Method Uses Accrual-Based Accounting Income