QUESTION 11

When a firm's debts are discharged in relation to a Ch 7 liquidation, it means that:

		the debts have priority and paid ahead of other debts.
		the debts are in the process of being evaluated by the courts.
		the debts are subject to partial payment, depending on liquidation assets.
		the debts are cancelled, with the creditors having no further claim

QUESTION 12

Best Place Corporation is most likely to realize the smallest percentage of its book value in bankruptcy on which of the following assets.

		Inventories
		Accounts receivable
		Plant & equipment
		Goodwill

QUESTION 13

If the plan of reorganization under Ch 11, allows the firm to remain in control of its assets, the firm is called:

		a debtor-in-possession
		a discharged organization
		a voluntary reorganization
		a bankrupt-organization-in-process

QUESTION 14

Reorganization is preferred over liquidation by creditors because:

		The creditors are in control of the liquidation and payment process.
		The firm's ability to pay its debt is higher when it is allowed to continue operations.
		More debts are required to be paid.
		The courts take control of the firm's assets, preventing the firm from selling them of without paying creditors.

QUESTION 15

During the reorganization process, a liability is subject to compromise if it is:

		A postpetition liability
		A prepetition unsecured liability
		A fully or partially secured liability
		A prepetition liability and fully secured