In Which of the Following Situations Will a Smaller Sum

question 65

Multiple Choice

In which of the following situations will a smaller sum be unable to discharge a larger debt?

• A) If the smaller sum is paid before the due date of the larger debt.
• B) If an additional article or service is given together with the payment of the smaller sum.
• C) If the smaller sum is paid when the larger sum would ordinarily be due,but the debtor is on the verge of insolvency.
• D) A smaller sum is never able to discharge a larger debt.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership equity spread among individual shareholders.

Working Capital

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