Question 1

How is break-even point calculated?

Accepted Answer

Break-even units = fixed costs / (selling price - variable cost per unit). Break-even revenue = fixed costs / gross margin %. For example, $50,000 fixed costs with $100 selling price and $60 variable cost: $50,000 / $40 = 1,250 units.

Question 2

What is straight-line depreciation?

Accepted Answer

Straight-line depreciation = (asset cost - salvage value) / useful life in years. A $10,000 machine with $1,000 salvage value and 5-year life depreciates by $1,800 per year. It is the simplest and most common method for financial reporting.

Question 3

What is the current ratio in accounting?

Accepted Answer

Current ratio = current assets / current liabilities. A ratio above 1.0 means the business can cover short-term obligations. The ideal range is 1.5-2.0. Below 1.0 signals potential liquidity problems. Above 3.0 may indicate excess idle assets.

Question 4

Are these accounting tools free?

Accepted Answer

Yes - completely free, no sign-up required. Results export to CSV or PDF.

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