Question

At the accounting break-even point, taxes are

Select one:

a. very low.

b. infinitely low.

c. zero.

d. infinitely high.

e. very high.

Answer 1

At the accounting break-even point, the total revenues of the company would be equal to the company's fixed cost and the company's variable cost so can be said that at this point the company will not be making profits and the taxes would be lower.

It cannot be said that the taxes will be zero because what have been calculated as a expense in accounting, would not be allowed in similar amount in taxation as we can see in case of deferred tax expenses and deferred tax income like depreciation is not allowed fully while taxation.

So it can be said that taxes would be very low.

Correct answer is (A) Very Low