1. Breakeven sales are the amount of revenue at which the business earns a profit of zero.

It is necessary
to cover costs and prevent a firm from operating at a loss.

2. Keeping records is important in business because it helps to track the costs and expenses that will be
used to determine whether it is making a profit or not.

3. There are three criteria for a principle to become generally acceptable. First, it should be relevant,
meaning the information is meaningful and useful to the user of financial statements. Second, it should
be objective, in which the result of information is not influenced by personal bias. Last it should be
feasible, meaning it should be implemented practically and achievable.

4. The basic accounting principle is the cost principle, objectivity principle, materiality principle,
matching principle, consistency principle, and adequate disclosure principle.

5. The basic accounting concepts are the accounting entity concept, going-concern assumption, time-
period assumption, unit of measure, and accrual basis.

6. It should be separated to determine by the proprietor whether his business is making a profit or not.

7. Accountants prepare financial statements at the end of the period also known as the accounting
period.

8. Periodicity concept is when the accountant prepares a financial statement at the end of the period of
either 1 month, 3 months, 6 months, or 12 months.

9. The three annual accounting periods are calendar year, fiscal year, and natural business year.

10. Because of the length of time involved in the business, it is very impractical to wait for several years
before financial position, performance, or result of operations and cash flows can be known.

11. The three types of activity in a business organization are operating activity, investing activity, and
financial activity.

12. The users of financial statements are the internal users and external users. The internal users such as
the manager and the owner use the information to take control of the inflows and outflows of all
economic activity which is helpful in managing the business effectively and efficiently. The second user is
the external users which are groups of users that do not have any access to managing the business.
There are seven types of external users such as investors who need the information to determine
whether they should invest or not, employees who are interested in information about stability and
profitability, lenders who use the information to determine whether the business is able to pay its
obligation, suppliers and other trade creditors use the information to determine whether the amounts
owing to them will be paid on maturity, customers need the information to know the continuance of the
business, government and their agency also need the information to regulate activities, determine
taxation policies, and a basis of national income, and lastly, the public needs the information to
determine the substantial contributions to the local economy by the business.

13. Sole proprietorship is owned and provided by one person also known as the proprietor. A
partnership is formed by two or more people called partners and set agreements about the profit and
losses are divided. A corporation is formed by any person, partnership, association or corporation. And
lastly is cooperative which is formed by 15 or more, having a common bond of interest and actually
working to the intended area of operation.