Which company is most likely closest to filing for bankruptcy in the near term? A) Company A which shows $0 in profit B) Company B which shows $0 in cash C) Company C which shows $0 in inventory
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Which company is most likely closest to filing for bankruptcy in the near term?
- A) Company A which shows $0 in profit
- B) Company B which shows $0 in cash
- C) Company C which shows $0 in inventory
Step by step
Solved in 2 steps
- For a company emerging from bankruptcy, how are liabilities (other than deferred income taxes) reported?a. At their historical value.b. At zero because of fresh start accounting.c. At the present value of the future cash flows.d. At the negotiated value less all professional fees incurred in the reorganization.Which of the following statements regarding bankruptcy is not true? A. Companies can be forced into involuntary bankruptcy by the creditors. B. Companies cannot be forced into involuntary bankruptcy by the creditors. C. Bankruptcy can result in a company liquidating its assets with the distribution of those proceeds to creditors. D. Bankruptcy can result in financial reorganization and continued existence.In case of bankruptcy of a company, who will get their money back only after all debts are repaid? a. Suppliers O b. Bond holders O c. None of these O d. Creditors
- If a company has declared bankruptcy, its financial statements likely violate: Multiple Choice O O O O The stable monetary unit assumption. The fair value measurement approach. The going concern assumption. The present value measurement approach.Bankruptcy issues: 1. Why do creditors accept a plan for financial rehabilitation rather than demand liquidation of business? 2. Would it be a sound rule liquidate whenever the liquidation value above the value of a corporation is a going concern? DiscussChoose the correct. An involuntary bankruptcy petition must be filed bya. The insolvent company’s attorney.b. The holders of the insolvent company’s debenture bonds.c. Unsecured creditors with total debts of at least $15,775.d. The company’s management.
- Under what conditions does a company that is emerging from a bankruptcy reorganization use fresh start accounting?Which one of the following is a direct bankruptcy cost? A.Loss of customer goodwill resulting from a bankruptcy filing B.Legal and accounting fees related to a bankruptcy proceeding C,Any financial distress cost D.Management time spent on a bankruptcy proceedingAn involuntary bankruptcy petition must be filed bya. The insolvent company’s attorney.b. The holders of the insolvent company’s debenture bonds.c. Unsecured creditors with total debts of at least $15,775.d. The company’s management.
- Choose the correct. What is a debtor in possession?a. The holder of a note receivable issued by an insolvent company prior to the granting of an order for relief.b. A fully secured creditor.c. The ownership of an insolvent company that continues to control the organization during a bankruptcy reorganization.d. The stockholders in a Chapter 7 bankruptcy.What is a debtor in possession?a. The holder of a note receivable issued by an insolvent company prior to the granting of an order for relief.b. A fully secured creditor.c. The ownership of an insolvent company that continues to control the organization during a bankruptcy reorganization.d. The stockholders in a Chapter 7 bankruptcy.Which of the following is not a reorganization item for purposes of reporting a company’s income statement during a Chapter 11 bankruptcy?a. Professional fees.b. Interest revenue.c. Interest expense.d. Gains and losses on closing facilities.
