Question 1

Which of the following observations concerning claims by general unsecured creditors is NOT true?

Accepted Answer

A)  They are paid only after secured creditors and unsecured creditors with priority are satisfied to the extent of any legal limits. 
B)  They often receive less than the full amount of their claim. 
C)  They are entitled to "preference payments" at the discretion of the debtor's management. 
D)  The amounts to be paid to them are usually stated as a percentage of the total claim. 
A)  They are paid only after secured creditors and unsecured creditors with priority are satisfied to the extent of any legal limits. 
B)  They often receive less than the full amount of their claim. 
C)  They are entitled to "preference payments" at the discretion of the debtor's management. 
D)  The amounts to be paid to them are usually stated as a percentage of the total claim.

Question 2

A debtor-in-possession balance sheet should report:
I.Liabilities not subject to compromise.
II.Liabilities subject to compromise.

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 3

Wright Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs. The carrying values and estimated fair values of the assets of Wright Company are as follows:
  
-Based on the preceding information,what is the estimated dividend percentage?

Accepted Answer

A)  45 percent 
B)  55 percent 
C)  61 percent 
D)  69 percent 
A)  45 percent 
B)  55 percent 
C)  61 percent 
D)  69 percent

Question 4

_____ have liens,or security interests,on specific assets.

Accepted Answer

A)  Secured creditors 
B)  Creditors with priority 
C)  Unsecured creditors 
D)  Assured creditors 
A)  Secured creditors 
B)  Creditors with priority 
C)  Unsecured creditors 
D)  Assured creditors

Question 5

Orville Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs. The carrying values and estimated fair values of the assets of Orville Company are as follows:
Debts of Orville are as follows:
    
-Based on the preceding information,what estimated amount will be available for general unsecured creditors upon liquidation?

Accepted Answer

A)  $28,000 
B)  $93,000 
C)  $113,000 
D)  $121,000 
A)  $28,000 
B)  $93,000 
C)  $113,000 
D)  $121,000

Question 6

Eagle Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs.The following information has been assembled for this statement:
 
What amount will be paid to the fully secured creditors and the creditors with priority?

Accepted Answer

The answer of Eagle Company recently petitioned for bankruptcy and...

Question 7

Which of the following could be true of the proceedings under Chapter 11 of the Bankruptcy Code?

Accepted Answer

A)  Always administered by the bankruptcy courts. 
B)  The debtor's assets are sold and its liabilities extinguished. 
C)  The company does not operate during this period. 
D)  The debtor continues as a business after the reorganization. 
A)  Always administered by the bankruptcy courts. 
B)  The debtor's assets are sold and its liabilities extinguished. 
C)  The company does not operate during this period. 
D)  The debtor continues as a business after the reorganization.

Question 8

Orville Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs. The carrying values and estimated fair values of the assets of Orville Company are as follows:
Debts of Orville are as follows:
    
-Based on the preceding information,what is the estimated dividend percentage?

Accepted Answer

A)  23 percent 
B)  93 percent 
C)  77 percent 
D)  68 percent 
A)  23 percent 
B)  93 percent 
C)  77 percent 
D)  68 percent

Question 9

Briefly explain the three classes of creditors specified in the Bankruptcy Code.

Accepted Answer

The Bankruptcy Code specifies three clas

Question 10

The accounting statement of affairs is prepared:

Accepted Answer

A)  at the end of the reorganization process. 
B)  at the end of the liquidation process. 
C)  at the beginning of the reorganization process. 
D)  at the beginning of the liquidation process. 
A)  at the end of the reorganization process. 
B)  at the end of the liquidation process. 
C)  at the beginning of the reorganization process. 
D)  at the beginning of the liquidation process.

Question 11

Wright Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs. The carrying values and estimated fair values of the assets of Wright Company are as follows:
  
-Based on the preceding information,what estimated amount will be available for general unsecured creditors upon liquidation?

Accepted Answer

A)  $34,000 
B)  $52,000 
C)  $56,000 
D)  $75,000 
A)  $34,000 
B)  $52,000 
C)  $56,000 
D)  $75,000

Question 12

A transfer of assets by a company in financial difficulty is considered a sale if:
I.the transfer includes a recourse provision allowing the buyer to return the asset.
II.the transferee obtains the right to pledge or exchange the transferred assets.
III.the transferred assets have been isolated from the transferor.
IV.the transferor does not maintain effective control over the transferred assets.

Accepted Answer

A)  I, II, and IV 
B)  Both I and III 
C)  Both I and II 
D)  II, III, and IV 
A)  I, II, and IV 
B)  Both I and III 
C)  Both I and II 
D)  II, III, and IV

Question 13

Chapter 7 of the Bankruptcy Code provides for:
I.Reorganization.
II.Liquidation.

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 14

Norton Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs.The following information has been assembled for this statement:

Accepted Answer

The answer of Norton Company recently petitioned for bankruptcy and...

Question 15

Which of the following items are likely to be reported in the supplementary items section of a statement of realization and liquidation?

Accepted Answer

A)  Creditors' claims settled during the period. 
B)  Trustee's administration fees. 
C)  New obligations incurred by the trustee. 
D)  Assets subsequently acquired by the trustee. 
A)  Creditors' claims settled during the period. 
B)  Trustee's administration fees. 
C)  New obligations incurred by the trustee. 
D)  Assets subsequently acquired by the trustee.

Question 16

In a statement of realization and liquidation,unusual revenue items are reported under:

Accepted Answer

A)  assets. 
B)  extraordinary items. 
C)  supplementary items. 
D)  These are never reported. 
A)  assets. 
B)  extraordinary items. 
C)  supplementary items. 
D)  These are never reported.

Question 17

The payment to general unsecured creditors is often termed:

Accepted Answer

A)  a "preference payment." 
B)  a "dividend." 
C)  a "write-off." 
D)  a "bonus." 
A)  a "preference payment." 
B)  a "dividend." 
C)  a "write-off." 
D)  a "bonus."

Question 18

Creditors may file which type of petition when seeking remedy under the Bankruptcy Code?
I.Voluntary
II.Involuntary

Accepted Answer

A)  I only 
B)  II only 
C)  Either I or II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Either I or II 
D)  Neither I nor II

Question 19

A trustee has been appointed for Smith Company,which is being liquidated under Chapter 7 of the Bankruptcy Code.The following transactions occurred after the assets were transferred to the trustee:
1.Credit sales by the trustee were $100,000.Cost of goods sold were $72,000,consisting of all the inventory transferred from Smith.
2.The trustee sold all $20,000 worth of marketable securities for $15,000.
3.Receivables collected by the trustee:
Old: $28,000 of the $50,000 transferred
New: $65,000
4.Disbursements by the trustee:
Old current payables: $31,000 of the $65,000 transferred
Trustee's expenses: $6,000
5.Recorded $24,000 depreciation on the plant assets of $120,000 transferred from Smith.
Required:
Prepare a statement of realization and liquidation according to the traditional approach illustrated in the chapter.
Problem 45 (continued):

Accepted Answer

The answer of A trustee has been appointed for Smith...

Question 20

What are the conditions necessary for using fresh start reporting in reorganization?

Accepted Answer

The conditions are:
1.The reorganization

Which of the following observations concerning claims by general unsecured creditors is NOT true?

A debtor-in-possession balance sheet should report: I.Liabilities not subject to compromise. II.Liabilities subject to compromise.

Wright Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs. The carrying values and estimated fair values of the assets of Wright Company are as follows: -Based on the preceding information,what is the estimated dividend percentage?

_____ have liens,or security interests,on specific assets.

Eagle Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs.The following information has been assembled for this statement: What amount will be paid to the fully secured creditors and the creditors with priority?

Which of the following could be true of the proceedings under Chapter 11 of the Bankruptcy Code?

Briefly explain the three classes of creditors specified in the Bankruptcy Code.

The accounting statement of affairs is prepared:

Chapter 7 of the Bankruptcy Code provides for: I.Reorganization. II.Liquidation.

Norton Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs.The following information has been assembled for this statement:

Which of the following items are likely to be reported in the supplementary items section of a statement of realization and liquidation?

In a statement of realization and liquidation,unusual revenue items are reported under:

The payment to general unsecured creditors is often termed:

Creditors may file which type of petition when seeking remedy under the Bankruptcy Code? I.Voluntary II.Involuntary

What are the conditions necessary for using fresh start reporting in reorganization?

Intercorporate Acquisitions and Investments in Other Entities

Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries With No Differential

The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries With No Differentials

Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value

Intercompany Inventory Transactions

Intercompany Transfers of Services and Noncurrent Assets

Intercompany Indebtedness

Appendix A: Intercompany Indebtedness

Consolidation Ownership Issues

Additional Consolidation Reporting Issues

Multinational Accounting: Foreign Currency Transactions and Financial Instruments

Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements

Segment and Interim Reporting

Sec Reporting

Partnerships: Formation,operation,and Changes in Membership

Partnerships: Liquidation

Governmental Entities: Introduction and General Fund Accounting

Governmental Entities: Special Funds and Government-Wide Financial Statements

Not-For-Profit Entities

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Exam 20: Corporations in Financial Difficulty

Which of the following observations concerning claims by general unsecured creditors is NOT true?

A debtor-in-possession balance sheet should report: I.Liabilities not subject to compromise. II.Liabilities subject to compromise.

Wright Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs. The carrying values and estimated fair values of the assets of Wright Company are as follows: -Based on the preceding information,what is the estimated dividend percentage?

_____ have liens,or security interests,on specific assets.

Eagle Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs.The following information has been assembled for this statement: What amount will be paid to the fully secured creditors and the creditors with priority?

Which of the following could be true of the proceedings under Chapter 11 of the Bankruptcy Code?

Briefly explain the three classes of creditors specified in the Bankruptcy Code.

The accounting statement of affairs is prepared:

Chapter 7 of the Bankruptcy Code provides for: I.Reorganization. II.Liquidation.

Norton Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs.The following information has been assembled for this statement:

Which of the following items are likely to be reported in the supplementary items section of a statement of realization and liquidation?

In a statement of realization and liquidation,unusual revenue items are reported under:

The payment to general unsecured creditors is often termed:

Creditors may file which type of petition when seeking remedy under the Bankruptcy Code? I.Voluntary II.Involuntary

What are the conditions necessary for using fresh start reporting in reorganization?

Intercorporate Acquisitions and Investments in Other Entities

Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries With No Differential

The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries With No Differentials

Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value

Intercompany Inventory Transactions

Intercompany Transfers of Services and Noncurrent Assets

Intercompany Indebtedness

Appendix A: Intercompany Indebtedness

Consolidation Ownership Issues

Additional Consolidation Reporting Issues

Multinational Accounting: Foreign Currency Transactions and Financial Instruments

Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements

Segment and Interim Reporting

Sec Reporting

Partnerships: Formation,operation,and Changes in Membership

Partnerships: Liquidation

Governmental Entities: Introduction and General Fund Accounting

Governmental Entities: Special Funds and Government-Wide Financial Statements

Not-For-Profit Entities

Filters