The distinction between bankruptcy and insolvency is:
A)unimportant, the terms mean essentially the same thing.
B)bankruptcy means a firm can't pay its bills, insolvency means its liabilities exceed its assets.
C)bankruptcy means a firm's liabilities exceed its assets, insolvency means it can't pay its bills.
D)bankruptcy is a court procedure, insolvency is a financial condition that may make bankruptcy appropriate.

Question

Quizplus · Accepted Answer

Bankruptcy is a court procedure, while insolvency is a financial condition that may make bankruptcy an appropriate option. Insolvency refers to a situation where a company's liabilities exceed its assets or where it is unable to pay its debts as they become due. While bankruptcy is often a result of insolvency, it is not the same thing.

The Distinction Between Bankruptcy and Insolvency Is