Accrual-based accounting is used in determining the accounting rate of return.

Question

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Accrual-based accounting is a method of accounting that recognizes revenue and expenses when they are incurred, regardless of when cash is exchanged. The accounting rate of return is a financial ratio that measures the average annual accounting profit earned by an investment. Therefore, accrual-based accounting is used in determining the accounting rate of return.

Accrual-Based Accounting Is Used in Determining the Accounting Rate of Return