When a Lender Has Appointed a Receiver,its Primary Objective Is

question 10

Multiple Choice

When a lender has appointed a receiver,its primary objective is redeeming sufficient assets to clear a loan.The ability of the receiver to control the business to the exclusion of the debtor is directly related to which of the following?

• A) Courts recognize that creditors are in the lending business.
• B) Creditors have a duty to deal with assets in a commercially responsible way.
• C) The survival of the business is secondary to the creditor.
• D) Creditors must avoid creating conflicts of interest.

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Definitions:

Indirect and Direct Methods

Two approaches for preparing cash flow statements: the direct method reports major classes of gross cash receipts and payments, while the indirect method adjusts net income for changes in balance sheet accounts to calculate cash from operating activities.

Direct Method

An approach in cost accounting that allocates service department costs directly to production departments without considering inter-service department flows.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding direct labor and materials.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded in the company's ledger during an accounting period.