Firms that use break-even on an accounting basis are really losing the opportunity cost of capital on their investments.

Question

Quizplus · Accepted Answer

Break-even on an accounting basis only considers the direct costs and does not take into account the opportunity cost of capital that could have been invested elsewhere. Therefore, firms using this method are not accounting for the potential returns they could have received with their capital investments, leading to a loss of opportunity cost.

Firms That Use Break-Even on an Accounting Basis Are Really