Which of the Following Statements Is Most CORRECT

question 6

Multiple Choice

Which of the following statements is most CORRECT?

• A) Federal bankruptcy law deals only with corporate bankruptcies.Municipal and personal bankruptcy are governed solely by state laws.
• B) All bankruptcy petitions are filed by creditors seeking to protect their claims against firms in financial distress.Thus, all bankruptcy petitions are involuntary as viewed from the perspective of the firm's management.
• C) Chapters 11 and 7 are the most important bankruptcy chapters for financial management purposes.If a reorganization plan cannot be worked out under Chapter 11, then the company will be liquidated as prescribed in Chapter 7 of the Act.
• D) "Restructuring" a firm's debt can involve forgiving a certain portion of the debt, but it cannot call for changing the debt's maturity or its contractual interest rate.
• E) Our bankruptcy laws were enacted in the 1800s, revised in the 1930s, and have remained unaltered since that time.

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Definitions:

Accrued Expense

Expenses that have been incurred but not yet paid for, recognized in the accounting periods they are incurred rather than when cash changes hands.

Unearned Revenue

Income received by a company for goods or services that have not yet been delivered or performed; it is recorded as a liability on the balance sheet until the goods or services are provided.

Rental Payments

Periodic payments made by a lessee to a lessor for the use of an asset.

Received

A term denoting that something has been accepted or collected, often used in financial transactions or in the acknowledgment of messages or goods.