Average accounting return is deﬁned as:
A) Average net income divided by average book value.
B) Average cash inﬂow divided by average cash outﬂow.
C) Average sales divided by average total assets.
D) Average net income divided by average project cost.
E) Average cash inﬂow divided by average book value.

Question

Quizplus · Accepted Answer

Average accounting return is calculated by dividing the average net income over a period of time by the average book value of the investment. It gives a measure of the profitability of an investment project based on the accounting data. Therefore, the correct option is A.

Average Accounting Return Is Deﬁned As