This study source was downloaded by 100000853470077 from CourseHero com on 09 28 2022 19 54 52 GMT 05 00 https www coursehero com file 70327453 Theories Chapter15docx CHAPTER 15Completion Statements1 The term used to describe the party that is the subject of a bankruptcy proceeding is Debtor 2 Creditors filing an involuntary bankruptcy petition must be owed at least P5 000 in total 3 The only basis for an involuntary bankruptcy filing by creditors is inability to pay debts as they mature 4 The major categories of debt that are given special priority under the bankruptcy statutes area Administrative costb Certain post filing gap claims in involuntary filingsc Wages salaries and commissionsd Employee benefit planse Deposits by individualsf Taxes5 The appointment of a trustee is infrequent 6 A class of creditors has accepted a plan of reorganization if such plan has been accepted by creditorsthat hold at least 2 3 in amount and more than in number of the allowed claims of such class of creditors 7 A trustee is authorized to void both fraudulent and preferential transfers 8 In a liquidation filing if the court desires information that relates the activity of the trustee with the book balances existing when the trustee was appointed then a statement of realization and liquidation may be prepared True or FalseFalse9 Creditors having security interests collateralized by specific assets of a debtor in bankruptcy liquidation are entitled to obtain satisfaction of their claims from the free assets of the debtor s estate False10 Unsecured creditors whose claims are to be paid in full from the assets of a debtor in bankruptcy liquidation before any cash is paid to other unsecured creditors are classified as unsecured creditors having preference False11 Assets in a statement of affairs financial statement are assigned to one of three categories assets pledged for fully secured liabilities assets pledged for partially secured liabilities and priority assets True12 Insolvency in the bankruptcy sense is a financial status in which the aggregate current fair value of the assets of a business enterprise is not sufficient to pay the enterprise s liabilities False13 The filing of a debtor s petition in bankruptcy does not operate as an order for relief by the bankruptcy court False14 Creditors having priority under the Bankruptcy Law include creditors having security interests collateralized by specific assets of the debtor True15 In the accountability technique of accounting used by a trustee for a debtor in bankruptcy liquidation there is no ledger account for owners equity True16 A railroad corporation may not file a debtor s petition for bankruptcy True17 A debtor in bankruptcy liquidation will not be discharged within Six years of a previous bankruptcy discharge True18 Owners equity amounts are not displayed in a statement of affairs financial statement False19 The bankruptcy court has the option of appointing either a trustee or an examiner in bankruptcy reorganization False20 All stockholders of a corporation undergoing bankruptcy reorganization must approve the plan of reorganization before it is confirmed by the bankruptcy court This study source was downloaded by 100000853470077 from CourseHero com on 09 28 2022 19 54 52 GMT 05 00 https www coursehero com file 70327453 Theories Chapter15docx Multiple Choice Questions21 When is a statement of affairs used a Only in liquidations b Only in reorganizations c In both liquidations and reorganizations d In preparing a statement of realization and liquidation e None of the above 22 In a statement of affairs a Assets pledged with Partially secured creditors are shown on the asset side of the statement and as a deduction on the liability side of the statement b Assets pledged with fully secured creditors are shown only on the liability side of the statement c Liabilities owed to fully secured creditors are shown only on the asset side of the statement d Liabilities owed to partially secured creditors are shown on the asset side of the balance sheet and as a deduction on the liability side of the statement e None of the above 23 In a statement of affairs a Liabilities with priority are shown on the liability side of the statement and as a deduction on the asset side of the statement b Assets pledged with fully secured creditors are shown on the liability side of the statement and asa deduction on the asset side of the statement c Liabilities owed to fully secured creditors are shown on the asset side of the statement and as a deduction on the liability side of the statement d Liabilities owed to partially secured creditors are shown on the asset side of the balance sheet and not as a deduction on the liability side of the statement e None of the above 24 A debtor filing a debtor s bankruptcy petition will not be discharged if the debtor had received a prior discharge in bankruptcy within the past a Two yearsb Four yearsc Six yearsd Eight years25 Typically the estimated amount available for short term prepayments in a statement of affairs financial statement is a Zero b Carrying amount c Current fair valued net realizable value26 William Bautista is starting a new business Bautista Enterprises which will be single proprietorship selling retail novelties Bautista recently received a discharge in bankruptcy but certain proved claimswere Unpaid because of insufficient funds Which of the following is still a claim against Bautista a The unpaid amounts owed to secured creditors who received less than the full amount after resorting to their security interest and receiving their bankruptcy cash paymentsb The unpaid amounts owed to trade creditors for merchandise purchased and sold by Bautista in the ordinary course of his prior business enterprisec A personal loan to Bautista by his father made in an attempt to avoid bankruptcyd The unpaid amount of income taxes payable to the United States that became due within three years preceding Bautista s bankruptcy This study source was downloaded by 100000853470077 from CourseHero com on 09 28 2022 19 54 52 GMT 05 00 https www coursehero com file 70327453 Theories Chapter15docx 27 What is defined as a condition in which a company is unable to meet debts as the debts mature a Deficitb Liability c Insolvencyd Credit squeeze28 What type of ledger account is the Estate Deficit account used in the trustee s accounting records for a debtor in bankruptcy liquidation a Assetb Liability c Equityd Revenuee None of the