Put the Following Classes in the Order Allowed by the Bankruptcy

question 21

Multiple Choice

Put the following classes in the order allowed by the Bankruptcy Act, starting with the highest priority to the lowest: 1)
Expenses to administer estate
2)
Tax claims of governmental units
3)
Wages (including salaries and commissions) up to $4,000 earned within 90 days
4)
Deposits up to $1,800 each for goods or services never received from the debtor

• A) 1,3,4,2
• B) 3,1,2,4
• C) 4,2,1,3
• D) 2,1,3,4

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Definitions:

Cash Flow from Operations

This reflects the cash that a company generates from its regular business activities, excluding long-term capital and investment costs.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the short term liquidity of a company.

Net Capital Spending

This refers to the amount spent by a company on acquiring or maintaining fixed assets, such as equipment or buildings, after accounting for depreciation.

Average Tax Rate

The percentage of total income that is paid in taxes, calculated by dividing the total tax amount by the total income.