A Stockholder's Investment in a Business Normally Creates an Asset

question 162

True/False

A stockholder's investment in a business normally creates an asset (cash), a liability (note payable), and stockholders' equity (investment).

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Definitions:

Break-even Point

The break-even point is the level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.

Margin of Safety

The difference between actual or expected sales and sales at the break-even point.

Sales Revenue

The income received by a company from its sales of goods or services, before any expenses are deducted.

Unit Selling Price

The price levied for an individual unit of a product or service.