Lesson 6.2.3

6.2.3 Break-Even Chart Quiz: NCFE Business & Enterprise, Unit 6

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

In partnership with Revision Ninja

Break-even analysis shows how many units a business must sell before it stops making a loss. This lesson covers the definition of break-even, drawing and reading the chart, calculating margin of safety, how price and cost changes shift the lines, and why the technique has limits.

Key points

  • At the break-even point total revenue equals total costs, so profit is zero; output below it makes a loss and output above it makes a profit.
  • On the chart, break-even sits where the revenue line crosses the total cost line, with output on the horizontal axis and money on the vertical.
  • Drawing the chart needs three figures: fixed costs, variable cost per unit and selling price.
  • The fixed cost line is the only flat line, and a rent rise lifts it, which raises break-even output.
  • Margin of safety is actual sales minus break-even sales, a measure of how much risk the business carries.
  • A higher price steepens the revenue line, so the firm breaks even on fewer sales and can judge pricing decisions.
  • A limitation is the assumption that everything produced is sold, which can hide a worse real position.

Key terms

Break-even point
The level of output where total revenue exactly matches total costs.
Revenue
Money earned from sales, found by selling price multiplied by quantity sold.
Profit
What remains of revenue once total costs have been paid.
Loss
The result when total costs are greater than total revenue.
Margin of safety
The gap between actual sales and break-even sales, showing how far demand could drop.
Fixed cost line
The horizontal line on a break-even chart, because fixed costs do not change with output.
Contribution
The amount each unit sold adds towards paying off fixed costs after variable costs are met.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

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The 20 questions

  1. What two main categories of financial items are shown on a balance sheet?

    • Revenue and expenses
    • Assets and liabilities
    • Receipts and payments
    • Inflows and outflows

  2. What components make up capital employed on a balance sheet?

    • Current assets minus liabilities
    • Share capital plus reserves
    • Total assets minus revenue
    • Equity plus non-current liabilities

  3. Which of these is classified as a non-current asset on a balance sheet?

    • Trade receivable
    • Inventory stock
    • Bank cash
    • Delivery van

  4. Which item is typically listed under current liabilities on a balance sheet?

    • Delivery van
    • Share capital
    • Trade payables
    • Bank mortgage

  5. What does the share capital figure represent on a statement of financial position?

    • Long-term bank loans
    • Current liabilities
    • Retained earnings
    • Money raised from shares

  6. A bank loan repayable in five years appears under which heading?

    • Current liabilities
    • Non-current assets
    • Shareholders' equity
    • Non-current liabilities

  7. What financial term describes the total value of all assets minus all liabilities?

    • Net assets
    • Working capital
    • Fixed capital
    • Gross profit

  8. What specific point in time does a balance sheet report financial position?

    • One particular day
    • One financial year
    • Five consecutive years
    • A three-month quarter

  9. Share capital plus retained profit adds up to which balance sheet total?

    • Capital employed
    • Shareholders' equity
    • Working capital
    • Long-term liabilities

  10. Why do both sides of a balance sheet always equal the same total?

    • Profit equals cash
    • Revenue equals costs
    • Assets equal claims
    • Equity equals debt

  11. Where on a Statement of Financial Position would you find a five-year bank loan?

    • Current liabilities
    • Non-current assets
    • Non-current liabilities
    • Owners' capital

  12. Which section of a Statement of Financial Position lists items the firm expects to turn into cash within twelve months?

    • Non-current assets
    • Current assets
    • Owners' capital
    • Current liabilities

  13. Which of these items is a common example of a current liability?

    • Long-term mortgage
    • Bank overdraft
    • Factory building
    • Retained profit

  14. Ravi puts £20,000 of his own savings into his business. Where will this appear on the Statement of Financial Position?

    • Current liabilities
    • Non-current assets
    • Owners' capital
    • Non-current liabilities

  15. Which item listed below is NOT classed as a non-current asset?

    • Property
    • Inventory
    • Equipment
    • Machinery

  16. Which equation underpins the Statement of Financial Position?

    • Assets + Liabilities = Capital
    • Liabilities = Assets + Capital
    • Capital = Assets + Liabilities
    • Assets = Liabilities + Capital

  17. Which term describes a firm's total long-term funding of equity plus non-current liabilities?

    • Capital employed
    • Working capital
    • Retained profit
    • Net assets

  18. A shop has current assets of £40,000 and current liabilities of £15,000. What is its working capital?

    • £25,000
    • £15,000
    • £40,000
    • £55,000

  19. Where on the Statement of Financial Position are amounts owed to suppliers for credit purchases recorded?

    • Current assets
    • Share capital
    • Non-current liabilities
    • Current liabilities

  20. A van's original cost minus the depreciation charged to date gives which figure in the Statement of Financial Position?

    • Net book value
    • Historical cost
    • Net realisable value
    • Replacement cost

All NCFE Business & Enterprise quizzes