Accrual Accounting Rate of Return Method Multiple Choice Questions with Answers – PDF Download

MCQ 1: If the net initial investment is $985000, returned working capital is $7500, then an average investment over five years will be:

1. $596,300
2. $485,300
3. $496,250
4. $486,250

MCQ 2: The categories of cash flows include:

1. net initial investment
2. cash flow from operations after paying taxes
3. cash flow from terminal disposal after paying taxes
4. all of above

MCQ 3: The sum of returned working capital and net initial investment is divided by 2 to calculate:

1. increase in operating income
2. average investment over five years
3. average capital invested
4. average rate of return

MCQ 4: Annual earned income is divided from a project by capital invested to calculate:

1. accrual accounting rate of return
2. returned working capital
3. increase in expected average annual
4. decrease in expected average annual

MCQ 5: The working capital cash outflow, cash outflow to buy machine and cash inflow from machine are the examples of:

1. cash flow from operations
2. terminal disposal of investment
3. net initial investment
4. average return on investment