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What does "Break-even point" represent in business?
  • a)
    The point where a business starts making a profit.
  • b)
    The point where a business incurs a loss.
  • c)
    The point where there is no profit or loss.
  • d)
    The point where a business is financially stable.
Correct answer is option 'C'. Can you explain this answer?
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What does "Break-even point" represent in business?a)The point where a...
The break-even point is the point at which a business neither makes a profit nor incurs a loss. It is the level of sales at which total revenue equals total costs, including fixed and variable costs. Beyond the break-even point, a business starts making a profit.
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Read the following hypothetical Case Study and answer the given questions:The business which follows the convention of prudence keeps provisions and reserves so that they can keep the liquidity of the firm and help it in the time of crisis. But, what are exactly Reserves and Provisions. When we talk about provisions, they mean setting aside a part of the profits for meeting a known future liability, the amount of which is not accurately known at the time of finalization of financial statements. It is made for meeting known future liability. The amount of the liability cannot be determined accurately. It is charge against profit reducing the profit. Provisions serve a lot of purposes. It helps in ascertaining the true net profit of the entity. The true financial position can be determined adequately. It helps in providing funds for the liabilities that may occur in future. It helps in the proper allocation of expenses that are incurred over the time.Reserves, on the other hand, means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise and not for meeting any liability, contingency or any commitment of the business. They are retained or undistributed net profit. It is voluntarily done to strengthen the financial position of the firm. It can be used for investing in outside securities. Like provisions, reserves are also very important for the business enterprises. It helps in meeting any unforeseen expenses. It strengthens the financial position of the firm. It helps in equal distribution of profit. It helps in providing funds to meet liability____________ means setting aside a part of the profits for meeting a known future liability.

Read the following hypothetical Case Study and answer the given questions:The business which follows the convention of prudence keeps provisions and reserves so that they can keep the liquidity of the firm and help it in the time of crisis. But, what are exactly Reserves and Provisions. When we talk about provisions, they mean setting aside a part of the profits for meeting a known future liability, the amount of which is not accurately known at the time of finalization of financial statements. It is made for meeting known future liability. The amount of the liability cannot be determined accurately. It is charge against profit reducing the profit. Provisions serve a lot of purposes. It helps in ascertaining the true net profit of the entity. The true financial position can be determined adequately. It helps in providing funds for the liabilities that may occur in future. It helps in the proper allocation of expenses that are incurred over the time.Reserves, on the other hand, means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise and not for meeting any liability, contingency or any commitment of the business. They are retained or undistributed net profit. It is voluntarily done to strengthen the financial position of the firm. It can be used for investing in outside securities. Like provisions, reserves are also very important for the business enterprises. It helps in meeting any unforeseen expenses. It strengthens the financial position of the firm. It helps in equal distribution of profit. It helps in providing funds to meet liability____________ means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise.

Read the following hypothetical Case Study and answer the given questions:The business which follows the convention of prudence keeps provisions and reserves so that they can keep the liquidity of the firm and help it in the time of crisis. But, what are exactly Reserves and Provisions. When we talk about provisions, they mean setting aside a part of the profits for meeting a known future liability, the amount of which is not accurately known at the time of finalization of financial statements. It is made for meeting known future liability. The amount of the liability cannot be determined accurately. It is charge against profit reducing the profit. Provisions serve a lot of purposes. It helps in ascertaining the true net profit of the entity. The true financial position can be determined adequately. It helps in providing funds for the liabilities that may occur in future. It helps in the proper allocation of expenses that are incurred over the time.Reserves, on the other hand, means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise and not for meeting any liability, contingency or any commitment of the business. They are retained or undistributed net profit. It is voluntarily done to strengthen the financial position of the firm. It can be used for investing in outside securities. Like provisions, reserves are also very important for the business enterprises. It helps in meeting any unforeseen expenses. It strengthens the financial position of the firm. It helps in equal distribution of profit. It helps in providing funds to meet liabilityWhich of the following is not a characteristic of Provisions?

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What does "Break-even point" represent in business?a)The point where a business starts making a profit.b)The point where a business incurs a loss.c)The point where there is no profit or loss.d)The point where a business is financially stable.Correct answer is option 'C'. Can you explain this answer?
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