Companies Sometimes Make Investments That Do NOT Require Cash

question 43

True/False

Companies sometimes make investments that do NOT require cash. Such transactions are called noncash investing activities and appear in a separate section of the cash flow statement.

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Definitions:

Break-even Sales

The amount of revenue required to cover both the variable and fixed costs of production, leading to a situation where a business makes neither profit nor loss.

Variable Costs

Costs that vary directly with the level of production output.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and tax, representing the efficiency of the company's core business.