The accounting rate of return method focuses on net operating income instead of net cash inflow generated by an asset.

Name: The accounting rate of return method focuses on net operating income instead of net cash inflow generated by an asset.
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Question

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The accounting rate of return method uses average net operating income as the numerator and the initial investment as the denominator. It does not take into consideration the time value of money or the actual cash inflows generated by the asset.

The Accounting Rate of Return Method Focuses on Net Operating