In Which of the Following Situations Would a Debtor Be

question 55

Multiple Choice

In which of the following situations would a debtor be considered "insolvent," as that term is applied in the Bankruptcy and Insolvency Act.

• A) The debtor has debts of more than $250 000.
• B) The debtor's assets have a fair market value lower than its liabilities,and it owes more than $1000.
• C) The debtor has committed a bankruptcy offence.
• D) The debtor has no option other than to liquidate its assets in order to pay all of its debts.

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Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit sold contributes to fixed costs and profit.

Variable Costs

Expenses that fluctuate directly with the volume of production or sales, such as raw materials and direct labor costs.

Fixed Costs

Constant expenditures that do not change with the volume of production or sales, such as rent or salaries.

Contribution Margin Ratio

A measure expressing how a product's selling price exceeds variable costs, shown as a percentage of the sales price.