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:

Average Costs

The cost per unit of output on average, calculated by dividing total costs by the total quantity of output.

Selling Price

Selling price is the amount of money a buyer pays to purchase a product or service from a seller.

Incremental Cost

An increase in cost between two alternatives.

Manufacturing Cost

The total cost incurred by a company to manufacture a product, including raw materials, labor, and overhead expenses.