Which of the following situations describes a person who could be insolvent? a. Assets $56,000; annual expenses $60,000b. Assets $78,000; net worth $22,000c. Liabilities $45,000; net worth $6,000d. Assets $40,000; liabilities $55,000e. Annual cash inflows $45,000; liabilities $50,000

Question

Thaddeus Mcintyre

Business

10 March, 23:16

Which of the following situations describes a person who could be insolvent? a. Assets $56,000; annual expenses $60,000b. Assets $78,000; net worth $22,000c. Liabilities $45,000; net worth $6,000d. Assets $40,000; liabilities $55,000e. Annual cash inflows $45,000; liabilities $50,000

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Answers (1)

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Johanna Benton · Answer 1

d. Assets $40,000; liabilities $55,000

Explanation:

Insolvent: When the person is not able to pay its debts. The maximum money will be recovered from his estates as the person is not in the position to pay its dues.

From the above options, option d is the most appropriate option as the liabilities consisted of a large amount whereas the asset values are of less amount.