Listed Below Are Five Terms Followed by a List of Phrases

question 136

Multiple Choice

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term.
-Changes in accounting estimates

• A)No journal entry needed, but disclosure is required.
• B)Handled prospectively.
• C)Adjustment to retained earnings of earliest year reported.
• D)Not used for changes in accounting principle.
• E)Information for change in reporting entity.

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Definitions:

Break-even Point

The point at which total costs equal total revenue, meaning the business makes neither a profit nor a loss.

Variable Cost

Costs that change in proportion to the level of production or business activity, such as materials, labor, and utility costs.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salary, or insurance, providing stability to a company's expense structure.

Margin of Safety

The difference between actual or projected sales and the break-even point, often expressed as a percentage.