A Corporation Is Adjudged Bankrupt

question 21

Multiple Choice

A corporation is adjudged bankrupt. When do the shareholders receive any payment?

• A) After the trustee liquidates the assets and pays the administrative expenses, the shareholders are paid before the creditors.
• B) After the trustee liquidates the assets, the administrative expenses and secured creditors are paid, then the unsecured creditors, and, then the shareholders divide any remainder.
• C) After the trustee liquidates the assets, the shareholders are paid, next the administrative expenses, the secured creditors, and then the unsecured creditors divide any remainder.
• D) After the trustee liquidates the assets, the shareholders are paid first because they are the owners of the firm and have the principal stake.

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Definitions:

Standard Abbreviation

A universally accepted shortened form of a word or phrase used to ensure clarity and consistency in written communication.

Bld P

Blood Pressure; the force exerted by circulating blood on the walls of blood vessels.

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A surgical operation performed on patients who are not required to stay in the hospital overnight.

Insurance Company

A financial institution that provides a range of insurance policies to protect individuals and businesses against potential loss or damage.