The Difference Between Liquidation and Reorganization Is

question 40

Multiple Choice

The difference between liquidation and reorganization is:

• A) reorganization terminates all operations of the firm and liquidation only terminates non-profitable operations.
• B) liquidation terminates only profitable operations and reorganization terminates only non-profitable operations.
• C) liquidation terminates all operations and reorganization maintains the option of the firm as a going concern.
• D) liquidation only deals with current assets and reorganization only consolidates debt.
• E) None of these.

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Definitions:

Control

In management and accounting, Control refers to the processes, policies, and procedures implemented by an organization to ensure its objectives are met, including accuracy of financial reporting and compliance with laws.

Investment in Associates

An investment in another company where the investor has significant influence, typically reflected by ownership of 20% to 50% of voting stock.

Net Loss

A situation where a company's total expenses exceed its total revenues, indicating that the business incurred a loss during a specific period.