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Managerial Accounting

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Features Of Accounting Rate of Return

MGRACT-UNKSKH

Which of the following comments are true about the accrual accounting rate of return?

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I. The accounting rate of return uses the project's accounting income rather than cash flows. II. Some firms use initial investment while others use average investment in the computation. III. The computation discounts the future estimated accounting income. IV. The accounting income is added to the initial investment in the computation.