4. In a quasi-reorganization, which of the following may occur?

11. Put the following classes in the order allowed by the Bankruptcy Act, starting with the highest priority
to the lowest:
1) Expenses to administer estate
2) Tax claims of governmental units
3) Wages (including salaries and commissions) up to $4,000 earned within 90 days
4) deposits up to $1,800 each for goods or services never received from the debtor

a. 1,3,4,2
b. 3,1,2,4
c. 4,2,1,3
d. 2,1,3,4
ANS: A DIF: M OBJ: 21-3

12. Which of the following statements is true?

a. Certain debts are not dischargeable.
b. The goal of liquidation is to give the company a new start.
c. All secured claims are paid in full.
d. The expenses to administer the estate are paid last because they are unsecured.
ANS: A DIF: E OBJ: 21-3

13. Which of the following does not describe the accounting statement of affairs?
a. the emphasis is on asset net realizable value, not historical cost
b. the statement of affairs is concerned only with the assets of the debtor organization, not the
claims
c. the statement can also be used in a reorganization
d. the statement of affairs is based on estimated values; actual realized values may be
different
ANS: B DIF: E OBJ: 21-4

14. The document used to estimate amounts available to each class of claims is called a(n)
a. Statement of Assets and Liabilities.
b. Legal Statement of Affairs.
c. Accounting Statement of Affairs.
d. Statement of Realization and Liquidation.
ANS: C DIF: E OBJ: 21-4

15. The document used by a trustee to report periodically on the status of fiduciary activities is called a(n)
a. Statement of Assets and Liabilities.
b. Legal Statement of Affairs.
c. Accounting Statement of Affairs.
d. Statement of Realization and Liquidation.
ANS: D DIF: E OBJ: 21-5

16. After eliminating the deficit in a reorganization plan, a balance may remain in Reorganization Capital.
On the balance sheet, where would this account appear?
a. part of the Paid-In Capital
b. part of the dated balance in Retained Earnings
c. an Intangible Asset if the balance is a debit

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