Answered: person or company is unable to pay…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Al Maha Travel Services Company, Nizwa has shown a loss in their balance sheet for the year ended 31st December 2020 and they availed a business loan of RO 55000 from Al Ahili Bank in January, 2019 but the company did not repay the instalment of loan from June, 2020. When the bank officials approached the company about the non-payment of loan, the manager of Al Maha Travel Services Company replied and declared that the company is Bankrupt. So, the bank has filed a case against the company. In this situation, what is the meaning of the term Bankrupt?

A person or company is unable to pay bank charges in time

A person or company is able to pay debts in time

A person or company is unable to pay debts in time

A person or company is able to discount bills with a bank

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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