{"id":105088,"date":"2021-01-30T17:09:44","date_gmt":"2021-01-30T11:39:44","guid":{"rendered":"https:\/\/www.vskills.in\/certification\/tutorial\/?page_id=105088"},"modified":"2024-04-12T14:28:24","modified_gmt":"2024-04-12T08:58:24","slug":"accounting-income-based-decision-rule","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/accounting-income-based-decision-rule\/","title":{"rendered":"Accounting Income-based Decision Rule"},"content":{"rendered":"\n<p>It is the oldest and most established investment decision rules. Here, accounting statements in particular accounting measures of income has been used. I.e., return on capital and return on equity.<\/p>\n\n\n\n<p>AAR: Average net income\/Average book value. A project is acceptable if its average accounting return exceeds a target return.<\/p>\n\n\n\n<p>Example of AAR: Assume the initial investment required is $240.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" src=\"http:\/\/www.vskills.in\/lms\/wp-content\/uploads\/2016\/06\/Image-65-1.jpg\" alt=\"Image 65\" class=\"wp-image-40275\"\/><\/figure><\/div>\n\n\n\n<p>Average net income = (105 + 30+ 0)\/3 = $45<\/p>\n\n\n\n<p>Average book value = (240 + 160 + 80 + 0)\/4 = $120<\/p>\n\n\n\n<p>AAR = Ave NI\/Ave BV = $45\/120 = 37.5%<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It is the oldest and most established investment decision rules. Here, accounting statements in particular accounting measures of income has been used. I.e., return on capital and return on equity. AAR: Average net income\/Average book value. A project is acceptable if its average accounting return exceeds a target return. Example of AAR: Assume the initial&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-105088","page","type-page","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Accounting Income-based Decision Rule - Tutorial<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.vskills.in\/certification\/tutorial\/accounting-income-based-decision-rule\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Accounting Income-based Decision Rule - Tutorial\" \/>\n<meta property=\"og:description\" content=\"It is the oldest and most established investment decision rules. 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