A firm that has a negative net worth is said to be:
A)experiencing a business failure.
B)in legal bankruptcy.
C)experiencing technical insolvency.
D)experiencing accounting insolvency.
E)in Chapter 11 bankruptcy reorganization.

Question

Quizplus · Accepted Answer

Accounting insolvency occurs when a firm has a negative net worth, which means its liabilities are greater than its assets based on accounting principles. This doesn't necessarily mean the firm is failing or in legal bankruptcy, but it does suggest that it may have difficulty meeting its financial obligations in the long run. Technical insolvency refers to a situation where a firm is unable to pay its debts as they come due, regardless of its accounting net worth.

A Firm That Has a Negative Net Worth Is Said