4.

ANS: A DIF: E OBJ: 21-2

17. Which of the following statements is true about Chapter 7 of the Bankruptcy Code?
a. Only voluntary petitions are allowed.
b. A debtor with at least 12 creditors may be subject to involuntary proceedings if 3 or more
of those creditors hold noncontingent, unsecured claims of $12,000 or more.
c. A debtor with fewer than 12 creditors may be subject to involuntary proceedings if 1 or
more of those creditors holds noncontingent, unsecured claims of $10,000 or more.
d. The requirements for involuntary proceedings are identical to those for Chapter 13.
ANS: C DIF: M OBJ: 21-3

18. The ratio called "dividend to general unsecured creditors" is calculated by which of the following
formulas?
a. Estimated amount available for unsecured creditors with/without priority divided by Total
claims of all unsecured creditors with/without priority
b. Estimated realizable value of all debtor assets divided by Book value of debtor assets
c. Estimated gain/loss on liquidation divided by Total estimated net realizable value of debtor
assets
d. Net estimated proceeds available to class 7 unsecured creditors divided by Total claims of
unsecured creditors
ANS: D DIF: M OBJ: 21-4

19. In the accounting statement of affairs, the gains or losses upon liquidation would equal
a. net book value of assets minus book value of liabilities.
b. the book value of assets minus their realizable value.
c. total estimated realizable value of assets minus the amount assigned to secured creditors.
d. total estimated realizable value of assets minus the amount remaining for Class 7
unsecured creditors.
ANS: B DIF: M OBJ: 21-4

20. A corporation's accounting statement of affairs shows a dividend of 40%. The dividend means that
a. all creditors and stockholders will receive approximately 40% of the book value of their
respective interests.
b. all creditors will receive an amount approximately equal to 40% of the book value of their
claims, but stockholders will receive nothing.
c. Class 1-6 unsecured claims will receive 40% of the book value of their respective claims.
d. Class 7 unsecured claims will receive 40% of the book value of their respective claims.
ANS: D DIF: M OBJ: 21-4

21. A corporation's accounting statement of affairs shows a dividend of 115%. The dividend means that
a. secured creditors will receive an amount in excess of the book value of their claims.
b. unsecured creditors will receive an amount in excess of the book value of their claims.
c. stockholders may expect some return on their interests.
d. an error was made in the preparation of the statement.
ANS: C DIF: M OBJ: 21-4

22.

21-1