The accounting rate of return is the only method that focuses on net income rather than cash flow.The accounting rate of return is net income as a percentage of investment,while payback period,net present value,and internal rate of return focus on cash flows.

Question

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The statement is true. The accounting rate of return is based on net income, while other methods such as the payback period, net present value, and internal rate of return focus on cash flows.

The Accounting Rate of Return Is the Only Method That