If the Volume of Sales Is $6,000,000 and Sales at the Break-Even

question 185

True/False

If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 25%.

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Definitions:

Contra-Asset Account

A contra-asset account is an account used in the financial accounting to offset against an asset account on the balance sheet.

Accounts Receivable

This refers to the money owed to a company by its customers for goods or services delivered or used but not yet paid for.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is a contra-asset account that estimates the amount of receivables that may not be collectible.

Future Transaction Value

The predicted or estimated financial value of a transaction that will occur at a later date, often used in forecasting and budgeting.