A Breakeven Analysis Is Used To

question 55

Multiple Choice

A breakeven analysis is used to:

• A) determine the amount of sales volume a company needs to start making a profit.
• B) utilize personal, family, or friends' money to start a business.
• C) represent a legal obligation to repay original debt plus interest.
• D) raise money by selling a certain share of the ownership of the business.
• E) purchase supplies or equipment through financing made available by vendors.

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Definitions:

Depreciation Expense

An accounting method used to allocate the cost of a tangible asset over its useful life.

Residual Value

The estimated value that an asset will have at the end of its useful life.

Estimated Life

The expected period over which an asset will be utilized or useful, often used for the purpose of depreciation or amortization calculations.

Depreciable Cost

The total cost of a fixed asset that can be depreciated over its useful life, excluding salvage value.