Mike's Business Is Not Doing Too Well and He Is

question 13

Multiple Choice

Mike's business is not doing too well and he is contemplating bankruptcy unless things change soon.As he currently deals with his creditors,the guiding principle should be that

• A)creditors of the same class should be treated equally.
• B)preferences should not include family or friends.
• C)all transactions within three months preceding bankruptcy are indefensible.
• D)transfers of property such as the sale of inventory will be invalidated.
• E)bankruptcy is an avenue of last resort and should be avoided at all cost.

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Definitions:

Work In Process Inventory

Goods partially completed during the manufacturing process, not yet ready for sale.

Units Transferred

The quantity of items moved from one stage of production or location to another within a given period.

Step-Down Method

A cost allocation method used in accounting and finance to distribute indirect costs to different departments or products.

Service Department Costs

Expenses incurred by the units that support the production or operations of a company, such as human resources or maintenance.