Which One of the Following Unsecured Liabilities Has the Highest

question 10

Multiple Choice

Which one of the following unsecured liabilities has the highest priority when an insolvent company is about to be liquidated?

• A) federal income taxes payable.
• B) claims for expenses of administering the bankruptcy.
• C) loans made to the company by its stockholders.
• D) employees' claims for salaries.
• E) bank loans.

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Definitions:

Administrative Costs

Expenses associated with the general operation of a business or organization, including salaries of non-revenue generating staff, office supplies, and utilities.

Environmental Costs

The economic costs associated with environmental damage or the degradation of natural resources, including clean-up and preventive measures.

Consumers

Individuals or entities that purchase goods and services for personal use, driving demand in the economy.

Parity Ratio

A ratio that compares two quantities to determine if they are equal, often used in economics to compare the value of different items.