The Margin of Safety Is

question 73

Multiple Choice

The margin of safety is

• A)the number of units that need to be sold to achieve a profit target.
• B)the amount of units expected to be sold above the break-even level.
• C)the sales dollars needed to cover fixed costs.
• D)the use of fixed costs to extract higher percentage changes in profits as sales volume changes.

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Definitions:

State Tax

A tax imposed by a state on earned income, business profits, property, sales, etc., that varies from state to state.

Itemized Deduction

Expenses listed separately that can be deducted from adjusted gross income to reduce taxable income, including medical expenses, taxes paid, interest, charitable contributions, and certain job-related expenses.

Constructive Receipt

This refers to the point at which an individual has access to, or control over, income, thus making it taxable, even if the income has not been physically received.

Compensation

Payment or salary received for services rendered or work done.