Final answer:
At the accounting break-even point, a firm's net income must equal zero, as it has only generated enough revenue to cover its total costs, with no profit or loss beyond the fixed costs. Option D is the correct answer.
Step-by-step explanation:
By definition, at the accounting break-even point, a firm covers all its operating costs and expenses with its revenue. At this point, a firm's net income, which is the firm's total revenue minus all expenses, including taxes and interest, equals zero. This is because, at break-even, a company has generated just enough revenue to cover its total costs, both variable and fixed. Therefore, at the break-even point, all profits or losses beyond the fixed costs are zero, indicating neither profit nor loss.
To further understand this concept, let's consider the following definitions. The break-even point is the level of output where the marginal cost curve intersects the average cost curve at the minimum point of AC; at this juncture, the firm is earning zero economic profits. During entry or exit, firms either join or leave an industry based on long-run equilibrium, with the goal that all firms earn zero economic profits producing the output level where price (P) equals marginal revenue (MR), equals marginal cost (MC), and equals average cost (AC).
The correct answer to the original question, which is 'By definition, which one of the following must equal zero at the accounting break-even point?' is (d) Net income.