Which of the Following Statements Are Correct Concerning the Accounting

question 43

Multiple Choice

Which of the following statements are correct concerning the accounting break-even point?
I. The net income is equal to zero at the accounting break-even point.
II. The net present value is equal to zero at the accounting break-even point.
III. The quantity sold at the accounting break-even point is equal to the total fixed costs plus depreciation divided by the contribution margin.
IV. The quantity sold at the accounting break-even point is equal to the total fixed costs divided by the contribution margin.

• A) I and III only
• B) I and IV only
• C) II and III only
• D) II and IV only
• E) I, II, and IV only

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Definitions:

Rate of Markdown

The percentage decrease from the original price of an item to its reduced price.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding the cost of goods sold.

Operating Profit

Earnings from a company's core business operations, excluding deductions of interest and taxes.

Trade Discount

A reduction in the retail price of goods, offered by wholesalers or manufacturers to retailers.