Which 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, taking into account the expected future accounting profits instead of the actual net cash flows. It calculates the average annual profit as a percentage of the initial investment. This method does not consider the time value of money and can be biased by accounting policies, but it can be useful for comparing multiple investment options within the same company.

Which Capital Budgeting Method Uses Accrual Accounting, Rather Than Net