Liquidation of a Corporation

question 9

Multiple Choice

Liquidation of a corporation:

• A) is carried out by a court-appointed receiver in any liquidation.
• B) is carried out by the board of directors, serving as trustees, in a voluntary liquidation.
• C) results in paying first stockholders with a liquidation preference, then outside creditors, then expenses of liquidation.
• D) is set up to protect stockholders and the board of directors, but not creditors.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money or money earned from deposited funds.

Interest Payable

Refers to the amount of interest that has been incurred on borrowed funds but has not yet been paid out to the lender as of the reporting date.

Current Liabilities

Obligations that a company must pay within the coming year or within its normal operating cycle, indicating the company's short-term financial responsibilities.