IMANET Exam CMA Topic 2 Question 84 Discussion

Actual exam question for IMANET's Certified Management Accountant exam

Question #: 84
Topic #: 2

[All Certified Management Accountant Questions]

The accounting rate of return?

AIs sonorous with the internal rate of return.

BFocuses on income as opposed to cash flows.

CIs inconsistent with the divisional performance measure known as return on
investment.

DRecognizes the time value of money.

Show Suggested Answer

Suggested Answer: B

The accounting rate of return (also called the unadjusted rate of return or book value rate of return) is calculated by dividing the increase in accounting net income by the required investment. Sometimes the denominator is the average investment rather than the initial irstment This method ignores the time value of money hand focuses on income as opposed to cash flows.

by Geoffrey at Apr 08, 2024, 11:47 AM

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Carri

1 days ago

Hmm, this seems like a tricky question. The accounting rate of return is a metric that I'm not too familiar with, so I'll have to think about this one.

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