The Accounting Break-Even Point Is That Level of Sales Where

question 27

Multiple Choice

The accounting break-even point is that level of sales where:

• A) sales revenue equals variable costs.
• B) sales revenue equals variable plus fixed costs.
• C) EBIT equals depreciation expense, thus cash flow equals zero.
• D) EBIT equals zero.

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Definitions:

Total Current Assets

The total value of all assets that are expected to be converted into cash within one year, including cash, inventory, and receivables.

Total Current Liabilities

The sum of all debts and financial obligations a company is expected to pay within one fiscal year.

Inventory Turnover Rate

A measure of how quickly a company sells and replaces its stock of goods within a certain period.

Balance Sheet

A report detailing a business's assets, debts, and owner's equity at a particular moment, offering a glimpse into its financial health.