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Question # 00005460
Subject: General Questions
Due on: 12/31/2013
Posted On: 12/15/2013 07:06 PM

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1. What is defined as a condition in which a company is unable to meet debts as the debts mature?
A. Deficit
B. Liability
C. Insolvency
D. Credit squeeze

2. Under a composition agreement,
A. creditors agree to accept less than the face amount of their claims.
B. debtors in financial difficulty transfer assets "without recourse."
C. a creditors' committee is initiated with a plan of settlement proposed by the debtor.
D. the debtor petitions for relief in a bankruptcy court.

3. In which of the following ways can debt be restructured?
I. Assets can be transferred to the creditor.
II. An equity interest can be granted to the creditor.
III. The terms of the debt can be modified.
A. I and II only
B. I and III only
C. II and III only
D. I, II, and III

4. Under which nonjudicial action do creditors agree to assist the debtor in managing the most efficient payment of creditors' claims?
A. Debt restructuring arrangement
B. Creditors' committee management
C. Transfer of assets
D. Composition agreement


5. 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.
A. I, II, and IV
B. Both I and III
C. Both I and II
D. II, III, and IV

6. Chapter 11 of the Bankruptcy Code provides for:
I. Reorganization.
II. Liquidation.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

7. Chapter 7 of the Bankruptcy Code provides for:
I. Reorganization.
II. Liquidation.
A. I only
B. II only
C. Both I and II
D. Neither I nor II

8. The Bankruptcy Reform Act contains chapters which deal with:
I. Individuals.
II. Corporations.
III. Municipal governments.
A. Only I and II
B. Only II and III
C. Only I and III
D. I, II, and III


9. A debtor may file which type of petition when seeking judicial protection under the Bankruptcy Reform Act?
I. Voluntary
II. Involuntary
A. I only
B. II only
C. Either I or II.
D. Neither I nor II

10. Creditors may file which type of petition when seeking remedy under the Bankruptcy Code?
I. Voluntary
II. Involuntary
A. I only
B. II only
C. Either I or II
D. Neither I nor II

11. Under the Bankruptcy Code, an insolvent corporation may be:
I. Reorganized.
II. Liquidated.
A. I
B. II
C. Either I or II
D. Neither I nor II

12. Which chapters of the Bankruptcy Code deal with corporations?
A. Chapters 1, 3, and 5
B. Chapter 9
C. Chapters 7 and 11
D. Chapters 12 and 13


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

14. Under Chapter 11 proceedings, what represents the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the entity's assets?
A. Reorganization value
B. Fire sale value
C. Fresh start value
D. Excess value

15. A reorganization value in excess of amounts assignable to identifiable assets is:
A. not reported.
B. reported as an intangible asset called Reorganization Value in Excess of Amounts Allocable to Identifiable Assets.
C. reported as Goodwill Associated with Exit or Disposal Activities.
D. passed on to prior shareholders of the company.

16. Which of the following observations regarding the use of fresh start accounting is true?
A. It is always required under Chapter 11 bankruptcy proceedings.
B. Prior shareholders will have control of the emerging company.
C. It results in a new reporting entity.
D. It is used under Chapter 7 bankruptcy proceedings.

17. _____ have liens, or security interests, on specific assets.
A. Secured creditors
B. Creditors with priority
C. Unsecured creditors
D. Assured creditors


18. As defined by the Bankruptcy Code, creditors with priority:
I. have collateral claim against specific assets.
II. are unsecured creditors who have priority over other unsecured creditors.
III. are the first to be paid from any proceeds available to unsecured creditors.
A. I only
B. II only
C. I, II and II
D. Both II and III

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

20. The payment to general unsecured creditors is often termed:
A. a "preference payment."
B. a "dividend."
C. a "write-off."
D. a "bonus."

21. "Preference payments" made by the debtor to one creditor to the detriment of all other creditors within 90 days before the bankruptcy petition was filed:
A. is reduced from the monies available to the general unsecured creditors.
B. is usually written off.
C. may be recovered and returned to the cash available for all creditors.
D. are not recovered, as management assurances are binding.

22. The accounting statement of affairs is prepared:
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.


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Tutorial Preview …business xxxxx the xxxxxxxxxxxxxx AACSB: Reflective xxxxxxxx AICPA: Decision xxxxxx 14 xxxxx xxxxxxx 11 xxxxxxxxxxxx what represents xxx fair value xx the xxxxxx xxxxxx considering xxxxxxxxxxx and approximates xxx amount a xxxxxxx buyer xxxxx xxx for xxx entity's assets? x Reorganization value x Fire xxxx xxxxx C xxxxx start value x Excess value xxxxxx Reflective xxxxxxxx xxxxxx Decision xxxxxx 15 A xxxxxxxxxxxxxx value in xxxxxx of xxxxxxx xxxxxxxxxx to xxxxxxxxxxxx assets is: x not reported x reported xx xx intangible xxxxx called Reorganization xxxxx in Excess xx Amounts xxxxxxxxx xx Identifiable xxxxxx C reported xx Goodwill Associated xxxx Exit xx xxxxxxxx Activities x passed on xx prior shareholders xx the xxxxxxx xxxxxx Reflective xxxxxxxx AICPA: Reporting xx Which of xxx following xxxxxxxxxxxx xxxxxxxxx the xxx of fresh xxxxx accounting is xxxxx A xx xx always xxxxxxxx under Chapter xx bankruptcy proceedings x Prior xxxxxxxxxxxx xxxx have xxxxxxx of the xxxxxxxx company C xx results xx x new xxxxxxxxx entity D xx is used xxxxx Chapter x xxxxxxxxxx proceedings xxxxxx Reflective Thinking xxxxxx Decision Making xx _____ xxxx xxxxxx or xxxxxxxx interests, on xxxxxxxx assets A xxxxxxx creditors x xxxxxxxxx with xxxxxxxx C Unsecured xxxxxxxxx D Assured xxxxxxxxx AACSB: xxxxxxxxxx xxxxxxxx AICPA: xxxxxxxx Making 18 xx defined by xxx Bankruptcy xxxxx xxxxxxxxx with xxxxxxxxx I have xxxxxxxxxx claim against xxxxxxxx assets …
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Preview: of xxx entity xxxxxx considering liabilities xxx approximates the xxxxxx a xxxxxxx xxxxx would xxx for the xxxxxxxx assets? A  Reorganization xxxxxx  Fire xxxx xxxxxx  Fresh xxxxx valueD  Excess xxxxxxxxxxxxx Reflective ThinkingAICPA: xxxxxxxx Making 15 xxx xxxxxxxxxxxxxx value xx excess of xxxxxxx assignable to xxxxxxxxxxxx assets xxxxxx xxxxx reported x  reported as xx intangible asset xxxxxx Reorganization xxxxx xx Excess xx Amounts Allocable xx Identifiable Assets x  reported xx xxxxxxxx Associated xxxx Exit or xxxxxxxx Activities D xxxxxxxx on xx xxxxx shareholders xx the company xxxxxxxx Reflective ThinkingAICPA: xxxxxxxxxxxxx  Which xx xxx following xxxxxxxxxxxx regarding the xxx of fresh xxxxx accounting xx xxxxxxxx  It xx always required xxxxx Chapter 11 xxxxxxxxxx proceedings x xxxxxxx shareholders xxxx have control xx the emerging xxxxxxx C xxxx xxxxxxx in x new reporting xxxxxx D  It xx used xxxxx xxxxxxx 7 xxxxxxxxxx proceedings  AACSB: xxxxxxxxxx ThinkingAICPA: Decision xxxxxxxxxx  _____ xxxx xxxxxx or xxxxxxxx interests, on xxxxxxxx assets  A xxxxxxxxx creditorsB xxxxxxxxxxx xxxx priorityC xxxxxxxxxxx creditorsD  Assured xxxxxxxxxxxxxxxxx Reflective ThinkingAICPA: xxxxxxxx Making 18 xxxx xxxxxxx by xxx Bankruptcy Code, xxxxxxxxx with priority:I xxxx collateral xxxxx xxxxxxx specific xxxxxx II are xxxxxxxxx creditors who xxxx priority xxxx xxxxx unsecured xxxxxxxxx III are xxx.....
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