accounting rate of return

Accounting rate of return is an indicator of profitability that is measured by dividing net accounting income by the amount invested.

- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.

- Example: Accountants use **accounting rate of return** when recording transactions and preparing the trial balance.

- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.