Question 10
Business FinanceA company is said to be insolvent when
- A.it makes a loss in any one year
- B.its total liabilities exceed total assets
- C.the ordinary shareholders receive no dividend from the company
- D.the preference shareholders could not be paid by the company
Show the answer and explanation
Answer: B (its total liabilities exceed total assets)
Explanation
A business is insolvent when what it owes is more than what it owns.