No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

CORPORATE LIQUIDATION

CONSULTATION MATERIAL
Theory Problems
Problem 1: The document used by a trustee to report periodically on the status of fiduciary activities is
known as:
a. Statement of affairs c. Statement of Realization and liquidation
b. Statement of assets and liabilities d. Balance sheet

Problem 2: A corporation’s accounting statement of affairs show a dividend of 110%. The dividend states
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. An error was made in the preparation of the statement
d. Shareholders may expect some return on their investment.

Problem 3: When a business becomes insolvent, it generally has three possible courses of action. Which
of the following is not one of the three possible courses of action?
a. The debtor or its creditors may file a petition of reorganization
b. The debtor or its creditors may file a bankruptcy petition, after which the debtor is liquidated
c. The debtor continues operating the business in the normal course of the day to day operations
d. The debtor and its creditors may enter into a contractual agreement, outside of formal bankruptcy
proceedings.

Problem 4: Assets realized is placed on which side of the statement of realization and liquidation?
a. Credit side, measured at estimated net realizable value
b. Debit side, measured at book value
c. Credit side, measured at book value
d. Credit side, measured at actual net proceeds from sale

Problem 5: Liabilities not liquidated is placed on which side of the statement of realization and liquidation?
a. Debit side, measured at estimated realizable value
b. Credit side, measured at book value
c. Debit side, measured at book value
d. Debit side, measured at actual cash settlement

Problem 6: Liabilities liquidated is placed on which side of the statement of realization and liquidation?
a. Debit side, measured at book value
b. Credit side, measured at book value
c. Debit side, measured at actual cash settlement
d. Credit side, measured at actual cash settlement

Problem 7: The net free asset is equal to

I. The realizable value of any remaining assets after full settlement of priority claims and fully secured
creditors and after partial payment to partially secured creditors equal to the realizable value of
asset pledged to partially secured creditors
II. Total free assets less total unsecured liabilities with priority
III. Total assets realizable value less the sum of unsecured creditors with priority, fully secured
creditors and realizable value of asset pledged to partially secured creditors.

a. II only c. I and III

b. I and II d. I, II and III

1|P a g e RFERRER/RLACO/AT ANG /PDEJESUS