QUESTION 6

Which one of the following is a fully secured liability?

		A $520,000 loan secured by inventory with a fair value of $475,000
		$100,000 in salaries owed to employees
		$50,000 in taxes owed to the IRS
		A $450,000 loan secured by a building with a fair value of $700,000

QUESTION 7

Which of the following would not appear on statement of realization and liquidation?

		Liabilities not liquidated
		Net realizable value of assets to be realized
		Gains on realization
		Liabilities incurred

QUESTION 8

The judicial system is not involved, when a company has financial difficulty in which of the following situations?

		Ch 11 reorganization
		Trouble debt restructuring
		Ch 13 bankruptcy
		Ch 7 liquidation

QUESTION 9

Identify the false statement in relation to Ch 11 reorganizations?

		Creditors may agree to a longer payment period but do not settle for partial payment.
		Once confirmed, the plan of reorganization binds all parties.
		The firm is allowed to remain in possession of its assets
		Proceedings begin when the debtor firm files a petition with the bankruptcy court.

QUESTION 10

Liabilities of $150,000 were settled in full for $112,000. The $38,000 difference would be reported on the statement of realization and liquidation as:

		A loss
		A gain
		Liabilities not liquidated
		Liabilities to be liquidated