Acoustic velocity meter (AVM) systems operate on the principles that the point-to-point upstream traveltime of an acoustic pulse is longer than the downstream traveltime and that this difference in traveltime can be accurately measured by electronic devices. An AVM system is capable of recording water velocity (and discharge) under a wide range of conditions, but some constraints apply: 1. Accuracy is reduced and performance is degraded if the acoustic path is not a continuous straight line. The path can be bent by reflection if it is too close to a stream boundary or by refraction if it passes through density gradients resulting from variations in either water temperature or salinity. For paths of less than 100 m, a temperature gradient of 0.1' per meter causes signal bending less than 0.6 meter at midchannel, and satisfactory velocity results can be obtained. Reflection from stream boundaries can cause signal cancellation if boundaries are too close to signal path. 2. Signal strength is attenuated by particles or bubbles that absorb, spread, or scatter sound. The concentration of particles or bubbles that can be tolerated is a function of the path length and frequency of the acoustic signal. 3. Changes in streamline orientation can affect system accuracy if the variability is random. 4. Errors relating to signal resolution are much larger for a single threshold detection scheme than for multiple threshold schemes. This report provides methods for computing the effect of various conditions on the accuracy of a record obtained from an AVM. The equipment must be adapted to the site. Field reconnaissance and preinstallation analysis to detect possible problems are critical for proper installation and operation of an AVM system.