The ________ capital budgeting method uses accrual accounting, rather than net cash flows, as a basis for calculations.

Question

Quizplus · Accepted Answer

The ARR (Accounting Rate of Return) method uses accrual accounting to calculate the average annual profit earned from an investment, rather than net cash flows. It is therefore the best choice for this question. The other options, Payback, NPV, and IRR, all use net cash flows to evaluate investment opportunities.

The ________ Capital Budgeting Method Uses Accrual Accounting, Rather Than