Which of the Following Statements Is Most CORRECT

question 1

Multiple Choice

Which of the following statements is most CORRECT?

• A) Our bankruptcy laws were enacted in the 1800s,revised in the 1930s,and have remained unaltered since that time.
• B) Federal bankruptcy law deals only with corporate bankruptcies.Municipal and personal bankruptcy are governed solely by state laws.
• C) All bankruptcy petitions are filed by creditors seeking to protect their claims on firms in financial distress.Thus,all bankruptcy petitions are involuntary as viewed from the perspective of the firm's management.
• D) Chapters 11 and 7 are the most important bankruptcy chapters for financial management purposes.If a reorganization plan cannot be worked out under Chapter 11,then the company will be liquidated as prescribed in Chapter 7 of the Act.
• E) "Restructuring" a firm's debt can involve forgiving a certain portion of the debt but does not involve changing the debt's maturity or its contractual interest rate.

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Definitions:

Variable Expenses

Expenses that change in proportion to the activity of a business.

Financial Advantage

A benefit gained in financial terms, which can result from factors such as cost savings, investment returns, or other monetary gains.

Outside Supplier

An external organization that provides goods or services to another company.

Variable Costs

Charges that fluctuate in accordance with the scale of production or total volume produced.