When a corporation liquidates, it performs three activities. What is the general order of these activities in a plan of liquidation?
A)pay debts, distribute property to shareholders, and wind up its affairs
B)wind up its affairs, distribute property to shareholders, pay debts
C)pay debts, wind up its affairs, and distribute property to shareholders
D)wind up its affairs, pay debts, and distribute property to shareholders

Question

Quizplus · Accepted Answer

The general order of activities in a plan of liquidation for a corporation is to first wind up its affairs, which includes ceasing operations and selling assets. Then, it pays off its debts with the proceeds. Finally, any remaining property or assets are distributed to the shareholders.

When a Corporation Liquidates, It Performs Three Activities