Accounting Break-Even Is Defined as the Sales Level That Causes

question 191

Multiple Choice

Accounting break-even is defined as the sales level that causes the project:

• A) Cash flows to equal zero.
• B) Discounted cash flows to equal zero.
• C) Net income to equal zero.
• D) Cash inflows to equal the initial cash outflows.
• E) Net income to equal the initial project expenditures.

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Definitions:

Operating Activities

Transactions and other events that affect the net income of a business, relating to its principal revenue-producing activities.

Accounting Equation

The fundamental equation of accounting, representing the relationship between assets, liabilities, and owner's equity (Assets = Liabilities + Equity).

Cash Dividend

A payment made by a company out of its profits to its shareholders, typically in the form of cash.

Stockholders' Equity

The portion of a company's assets that belongs to the shareholders, calculated as the company's total assets minus its total liabilities.