The Chapter 7 Small Business Form of Bankruptcy Makes Sense

question 37

Multiple Choice

The Chapter 7 small business form of bankruptcy makes sense only if:

• A) the owner wants to walk away.
• B) the business has valuable assets to sell.
• C) the family members become its successors.
• D) the business closes down with all debts paid.
• E) the business attracts venture capitalists.

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Definitions:

Accounts Payable

The amount of money a company owes to its suppliers or creditors for goods or services purchased on credit.

Budgeted Purchases

Projected expenditures for goods or services during the budget period, often used in planning an organization's operations.

Budgeted Sales

The anticipated revenue from goods or services a company plans to sell over a certain period, based on forecasts.

Direct Materials Budget

A financial plan that estimates the raw materials required for production and the cost associated with these materials for a specific period.