In the Process of Liquidation, Some Types of Claims Receive

question 86

Multiple Choice

In the process of liquidation, some types of claims receive preference over other claims.Which one of the following determines which type of claim is paid first?

• A)Technical insolvency definition
• B)Absolute priority rule
• C)Accounting insolvency definition
• D)Chapter 7 of the Federal Bankruptcy Reform Act of 1978
• E)Securities and Exchange Commission

---

Definitions:

Job Order Costing System

A job order costing system tracks costs for each individual job or batch of goods produced, assigning specific materials, labor, and overhead costs to each.

Custom Goods

Products that are personalized or made to order according to the specifications provided by the customer.

Work in Process Account

An account used to record the costs associated with goods that are partially completed in manufacturing but not yet ready for sale.

Job Order Cost System

An accounting system used to track costs associated with specific jobs or orders, including materials, labor, and overhead.