Of the following, __________ does NOT necessarily indicate ﬁnancial distress.
A) Business failure.
B) Legal bankruptcy.
C) Technical insolvency.
D) Accounting insolvency.
E) An involuntary bankruptcy petition.

Question

Quizplus · Accepted Answer

Accounting insolvency refers to a situation where a company's liabilities exceed its assets based on accounting principles, but it does not necessarily mean that the company is financially distressed. It could be due to accounting practices, such as depreciation or write-offs, that do not reflect the company's true financial position. The other options, such as business failure, legal bankruptcy, technical insolvency, and an involuntary bankruptcy petition, typically indicate financial distress.

Of the Following, __________ Does NOT Necessarily Indicate ﬁNancial Distress