Which of the Following Claims Will Be Paid First from the Debtor's

question 22

Multiple Choice

Which of the following claims will be paid first from the debtor's estate under Chapter 7?

• A) A gap creditor with a claim of $2,000.
• B) A state claiming $5,000 in back taxes.
• C) The trustee's expenses of $3,000.
• D) Employees claiming unpaid wages of $5,000 for wages earned within 90 days of the bankruptcy filing.

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Definitions:

Operating Activities

Transactions and events related to the core business functions, including revenue and expense activities that affect net income on the income statement.

Direct Method

A method for creating the cash flow statement by directly listing the actual cash flows associated with operating activities.

Operating Activities

Business actions that are involved in the day-to-day functions of producing goods, offering services, and other core operations.

Direct Method

A way of allocating service department costs directly to production departments without any consideration for services rendered between service departments.