acyava1 corporate liquidation

Problem 31: The total free assets in the statement of affairs will be available to the following except:

a. Fully secured creditors

b. Partially secured creditors

c. Unsecured creditors with priority

d. Unsecured creditors without priority

A

Problem 32: The total net free assets will be distributed to the following:

I. Unsecured creditors with priority

II. Unsecured creditors without priority

III. Fully secured creditors

IV. Partially secured creditors

a. I and II only

b. II and IV only

c. I, II and IV only

d. All of the above

B

Problem 33: In a statement of affairs, assets pledged for partially secured creditors are:

a. Included with assets pledged for fully secured creditors

b. Offset against partially secured liabilities

c. Included with free assets

d. Disregarded

B

Problem 34: The accounting records of a trustee in a bankruptcy liquidation are maintained:

a. Under the accrual method

b. Under an accountability technique

c. Under the cash method

d. In accordance with court order

B

Problem 35: The estimated amount available for free assets in a statement of affairs for business enterprise undergoing bankruptcy liquidation is equal to the assets:

a. Carrying amount less current fair values

b. Carrying amount plus gain or less loss on realization

c. Carrying amount plus loss or less gain on realization

d. Current fair value less carrying amounts

B

Problem 36: Which of the following unsecured liabilities with priorities will be first settled by the debtor corporation?

a. Liquidation expense

b. Salaries and wages

c. Taxes

d. None of the choices

A

Problem 37: A corporation that is unable to pay its debts as it becomes due is: 

a. Insolvent

b. Overdrawn

c. Bankrupt

d. Liquidating

A

Problem 38: On the statement of affairs, the liabilities are classified?

a. Current and non-current liabilities

b. Unsecured liabilities with priority and Unsecured without priority

c. Monetary and Nonmonetary liabilities

d. Secured and Unsecured liabilities

D

Problem 39: The anticipated administrative expenses for liquidation shall be classified on the statement of affairs as:

a. As unsecured liability with priority

b. As unsecured liability without priority

c. As secured liability

d. As disclosure only

A

Problem 40: In every corporate liquidation, which of the following creditors will always fully recover their claims from a liquidating corporation?

a. Unsecured creditors with priority

b. Unsecured creditors without priority

c. Partially secured creditors

d. Fully secured creditors

D

Problem 41: Which of the following is not a liability that has priority in corporate liquidation?

a. Administrative expenses incurred in the liquidation

b. Payroll taxes due to the government

c. Advertising expense incurred before the company became insolvent

d. Salaries payable

C

Problem 42: An arrangement for creditors to accept an amount less than the amount owed to them is referred to as a

a. Discharge agreement

b. Composition agreement

c. Bankruptcy agreement

d. Chandler agreement

B

Problem 43: Which of the following unsecured liabilities with priority of a liquidating corporation shall be settled first?

a. Liabilities for employee benefits

b. Liabilities for corporate income tax

c. Liabilities for corporate crime

d. Liabilities for quasi-delict

A

Problem 44: At the time of corporate liquidation, the redeemable preferred stockholders received only the partial amount of the redemption value of their shares of stocks. Which of the creditors of this dissolved and liquidated corporation received the full amount of their claims?

a. Fully secured creditors only

b. Fully secured creditors and unsecured creditors with priority only

c. Partially secured creditors and unsecured creditors without priority only

d. All the creditors of the corporation

D

Problem 45: The statement of realization and liquidation differs from the statement of affairs because:

a. The statement of realization is a summary of secured debt activity only.

b. The statement of realization is prepared only at that final completion of the liquidation process.

c. The statement of realization reports estimated realization values rather than the actual realization results.

d. The statement of realization reports actual liquidation results rather than estimated realizable values.

D

The “assets not realized” represents the net realizable value of the non-cash assets at the end of the current period. 

F

In a liquidation proceeding, if the proceeds on the realization of an asset exceed the lien against that asset, the excess is assigned to:

A. The holder of the lien.

B. Meet the claims of the unsecured creditors.

C. The stockholders of the corporation.

D. Other lien holders whose assets will not realize a sufficient amount to cover their liens.

B

On a statement of realization and liquidation covering the six months ended August 31:

A. “liabilities liquidated” represents obligations settled in full.

B. “liabilities not liquidated” represents amounts that creditors will be unable to collect.

C. “liabilities to be liquidated” represents the amount of obligations as of August 31.

D. “liabilities to be liquidated” represents the amount of obligations as of March 1.

D