The Accounting Rate of Return (ARR) formula is useful in determining a project’s annual percentage rate of return.
ARR is calculated as the average annual return/initial investment.
ARR is usually used when considering multiple projects because it provides the expected rate of return from each project.
One of the limitations of ARR is that it does not distinguish between investments that generate different cash flows over the life of the project.
ARR is different from the required rate of return (RRR), which is the minimum return that an investor can accept on an investment or project that compensates them for a given level of risk.
Accountability is the acceptance of responsibility for one’s actions. This implies a willingness to be transparent, allowing others to observe and evaluate their work.
Accounting policies are the procedures a company uses to prepare financial statements. Unlike accounting principles, which are rules, accounting policies are the standard for following those rules.
Acquisition accounting is a set of formal guidelines describing how the acquirer should report the assets, liabilities, non-controlling interests and goodwill of the acquired company.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.