Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Fundamental Accounting Equation

Financial Accounting

1. Introduction to Accounting

Fundamental Accounting Equation

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Multiple Choice

The break-even point is the sales level at which a company:

Total revenues equal total expenses, resulting in zero net income.

Has total assets equal to total liabilities.

Begins to generate a profit on each additional unit sold.

Has cash inflows exceeding cash outflows.

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Verified step by step guidance

Understand the concept of the break-even point: It is the level of sales at which total revenues equal total expenses, resulting in zero net income. This is a critical point for businesses to determine when they start covering all their costs.

Identify the components involved in calculating the break-even point: Total revenues (sales revenue) and total expenses (fixed costs + variable costs). At the break-even point, these two amounts are equal.

Use the formula for the break-even point in units: \( \text{Break-even point (units)} = \frac{\text{Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}} \). This formula helps calculate the number of units that need to be sold to reach the break-even point.

Alternatively, use the formula for the break-even point in sales dollars: \( \text{Break-even point (sales dollars)} = \frac{\text{Fixed Costs}}{1 - \frac{\text{Variable Costs}}{\text{Sales Revenue}}} \). This formula calculates the total sales revenue required to break even.

Analyze the implications of reaching the break-even point: Once the break-even point is achieved, any additional sales contribute to profit, as fixed costs are already covered. This is a key milestone for financial planning and decision-making.