The costs incurred by a business in an effort to avoid bankruptcy are classified as ________ costs.
A) flotation
B) direct bankruptcy
C) indirect bankruptcy
D) financial solvency
E) capital structure

Question

Quizplus · Accepted Answer

The costs incurred by a business in an effort to avoid bankruptcy are classified as indirect bankruptcy costs. These costs include legal fees, consulting fees, and other expenses associated with restructuring, reorganizing, or refinancing the business in order to avoid bankruptcy.

The Costs Incurred by a Business in an Effort to Avoid