If Forecasted Sales Exceed the Break-Even Level but Are Less

question 72

Multiple Choice

If forecasted sales exceed the break-even level but are less than the NPV break-even level, the project has a:

• A)Positive NPV but earns less than the discount rate
• B)Negative NPV but earns more than the discount rate
• C)Net loss on the income statement
• D)Net profit on the income statement

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Definitions:

Revenues

The sum of revenue obtained through the sales of products or services that are central to a company's main activities.

Multiple-Step

An income statement format that separates operating revenues and expenses from nonoperating revenues, expenses, and gains and losses.

Single-Step

An income statement format that consolidates all revenues and gains together and all expenses and losses together, resulting in a single step to determine net income.

Gross Profit

The difference between sales revenue and the cost of goods sold, showing the basic profitability of a company's core business activities.