The Point Where the Profit Line Intersects the Horizontal Axis

question 13

Multiple Choice

The point where the profit line intersects the horizontal axis on the profit-volume chart represents:

• A) the maximum possible operating loss
• B) the maximum possible operating income
• C) the total fixed costs
• D) the break-even point

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Definitions:

Year-end Balance Sheets

Financial statements detailing a company's assets, liabilities, and equity at the end of a fiscal year.

Retained Earnings

Profits that a company retains rather than distributes to its shareholders as dividends, often used for reinvestment.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss of value over time.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue.