When a Corporation Liquidates, It Performs Three Activities

question 78

Multiple Choice

When a corporation liquidates, it performs three activities. What is the general order of these activities in a plan of liquidation?

• A) pay debts, distribute property to shareholders, and wind up its affairs
• B) wind up its affairs, pay debts, and distribute property to shareholders
• C) wind up its affairs, distribute property to shareholders, pay debts
• D) pay debts, wind up its affairs, and distribute property to shareholders

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Definitions:

Average Rate of Return

A financial ratio that calculates the average annual return an investor can expect over the lifetime of an investment, expressed as a percentage of the original investment.

Residual Value

The estimated value that an asset will have at the end of its useful life, after considering depreciation or amortization.

Useful Life

The estimated duration of time over which an asset is expected to be functional and contribute to a company's operations.

Average Rate of Return

A financial metric that assesses an investment's profitability by dividing the annual average profit by the initial cost of investment.