Within the Context of Bankruptcy and Insolvency Laws, Which of the Following

question 60

Multiple Choice

Within the context of bankruptcy and insolvency laws, which of the following statements is TRUE?

• A)A preferred creditor is entitled to be paid before all other creditors.
• B)Pro rata sharing is a system in which each class of creditors is paid the same amount, regardless of how many members it contains.
• C)A preference occurs when the debtor pays one creditor, but not others, within a certain time prior to bankruptcy.
• D)A share exchange is possible only under an assignment into bankruptcy.
• E)Liquidation occurs only after the debtor is discharged from bankruptcy.

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Definitions:

Accounts Receivable

This represents money owed to a company by its customers for goods or services provided on credit.

Subsidiary Ledger

A ledger containing the details of accounts summarized in a controlling account in the general ledger.

Accounts Payable

Liabilities representing money owed by a company to suppliers or creditors for goods and services received but not yet paid for.

Accounting Information System

An Accounting Information System is a structured framework used to collect, store, manage, process, retrieve, and report financial data.