The Expertise with Which the Small Business Owner Can Understand

question 13

True/False

The expertise with which the small business owner can understand, interpret, and use the information found in the financial statements will determine the soundness of the financial decisions made.

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Definitions:

Break-Even Point

The financial point at which total revenues equal total costs, resulting in no net profit or loss.

Variable Costs

Charges that directly correlate with the volume of production or sales, such as direct labor and materials required for production.

Fixed Costs

These are business expenses that remain the same regardless of the level of production or sales, such as rent or salaries.

Break-Even Point

The level of sales at which total revenues equal total expenses, resulting in neither profit nor loss.