Which of the following is a weakness of the accounting rate of return?
A)It does not consider profit projections.
B)It does not consider the time value of money.
C)It ignores cash flows after the end of its useful life.
D)It ignores the amount of revenues and expenses the project may generate.

Question

Quizplus · Accepted Answer

The accounting rate of return does not consider the time value of money, which means that it assumes that money received in the future has the same value as money received today. This weakness can lead to incorrect investment decisions, as it does not accurately reflect the true profitability of a project.

Which of the Following Is a Weakness of the Accounting