The point at which Total Revenue equals Total Cost is known as: MCQ with Answer and Explanation

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The point at which Total Revenue equals Total Cost is known as:

A. Shut-down Point

B. Break-Even Point

C. Margin of Safety

D. Maximum Profit Point

Answer: Option B

Solution (By JKSSB Mock Tests)

At the break-even point, a business makes neither a profit nor a loss (Total Revenue = Total Costs).

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

The 'Throughput Accounting' emphasises:

A. Increasing fixed cost

B. Maximising production volume

C. Reducing labour cost

D. Maximising throughput (sales minus material cost) while minimising operating expenses and inventory

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Correct Answer: Option D

Explanation:
Throughput accounting is based on the Theory of Constraints.

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Question #2

When analyzing Cost Accounting data, 'Contribution' is useful for:

A. Make or Buy decisions

B. Calculating Income Tax

C. Valuing Goodwill

D. Determining depreciation

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Correct Answer: Option A

Explanation:
Contribution (Sales - Variable Cost) is a key metric in marginal costing used for managerial decisions like 'Make or Buy', dropping a product, or accepting special orders.

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Question #3

Revenue from sale of goods is recognized when:

A. Order is received

B. Production is completed

C. Risks and rewards are transferred to the buyer

D. Cash is received

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Correct Answer: Option C

Explanation:
As per AS 9 (Revenue Recognition), revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred.

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