The Statement That Is True About the Order of Repayment

question 10

Multiple Choice

The statement that is true about the order of repayment for a company in liquidation is:

• A) creditors rank before ordinary shareholders.
• B) ordinary shareholders rank before preference shareholders.
• C) wages owing to employees rank last.
• D) All of the statements are true.

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Definitions:

Five Year Bonds

Debt securities issued with a maturity of five years, typically paying interest semi-annually.

Factor Receivables

The financial practice of selling accounts receivable to a third party at a discount to immediately generate cash.

Uncollectible Accounts

Accounts receivable that are recognized as not being collectible, representing losses to the company.

Lending Institution

A financial institution that provides loans to individuals or businesses.