The Margin of Safety Percentage Is Computed As

question 19

Multiple Choice

The margin of safety percentage is computed as:

• A)Break-even sales/Total sales.
• B)(Total sales - Break-even sales)/Break-even sales.
• C)Total sales - Break-even sales.
• D)(Total sales - Break-even sales)/Total sales.

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditures to the appropriate period for an accurate financial statement.

Cost Method

An accounting method used to value an investment, where the investment is recorded at its acquisition cost and dividends are recorded as income.

Elimination

The process in accounting of removing the effects of inter-company transactions to avoid double counting in consolidated financial statements.

Share Capital Account

a financial record that represents the funds raised by a company through issuing shares to its shareholders.