Average Accounting Return: Definition & Weaknesses


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What is the average accounting return of a business investment that costs $150,000 and has an average accounting profit of $25,000?

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1. Which of the following is a weakness of the average accounting return?

2. Under which of these situations would a business owner use the average accounting return formula?

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About This Quiz & Worksheet

What is the average accounting return? See what you know about this term and some of its weaknesses by using the quiz and worksheet.

Quiz & Worksheet Goals

You will see these topics on the quiz:

  • A weakness of the average accounting return
  • Another name for the average accounting return
  • Working with AAR
  • Circumstance where a business owner would use the average accounting return formula

Skills Practiced

  • Information recall - access the knowledge you have gained about a con of using the average accounting return
  • Making connections - use understanding of the concept of AAR and its formula
  • Interpreting information - verify that you can read information about working with AAR and interpret it correctly

Additional Learning

If you want to learn more, use the lesson titled Average Accounting Return: Definition & Weaknesses. Thanks to this lesson, you can expand on your knowledge of:

  • What the average accounting return determines
  • How to effectively use AAR
  • Weaknesses of the AAR