Which of the Following Payments Is Considered Preferential

question 35

Multiple Choice

Which of the following payments is considered preferential?

• A) Payments made in the ordinary course of business
• B) Payment of monthly utility bills
• C) Payment made by an insolvent debtor within 250 days of the filing of the bankruptcy petition
• D) Payment to a creditor giving him a greater percentage of a preexisting debt than other similar creditors

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Definitions:

Work In Process Inventory

Inventory that includes all materials, labor, and overhead costs for products that are in the production process but not yet completed.

Direct Materials

These are raw materials that can be directly identified with the finished product in terms of cost and physical involvement.

Factory Overhead

All costs related to production that are not direct materials or direct labor costs.

Conversion Cost

Conversion cost is the combination of labor and manufacturing overhead costs incurred to convert raw materials into finished goods.