Which of the Following Does Not Correctly Rank the Priority

question 235

Multiple Choice

Which of the following does not correctly rank the priority of claims of the parties to a corporate bankruptcy? (Rank from strongest to weakest.)

• A) Wages and salaries; consumer claims; unsecured creditors.
• B) Contributions to employee benefit plans; consumer claims; common stockholders.
• C) Government tax claims; preferred stockholders; unsecured creditors.
• D) Bankruptcy-related administrative expenses; wages and salaries; common stockholders.
• E) Wages and salaries; consumer claims; preferred stockholders.

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Definitions:

Owner's Equity

The total value of assets owned by the proprietorship after all debts and liabilities have been settled; essentially the net worth of a company.

Liabilities

Financial obligations or debts owed by a business to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Assets

Assets are possessions or property that a company owns or controls, anticipated to yield benefits in the future.

Claims

Demands for payment or entitlements to compensation for loss, damage, or injury; often encountered in insurance and legal contexts.