Bankruptcy + keeping records of spending Flashcards Preview

Commerce Exam Term 1 > Bankruptcy + keeping records of spending > Flashcards

Flashcards in Bankruptcy + keeping records of spending Deck (11):
1

Why is it important to maintain records/ evidence of financial spending?

- so you can understand where your money is gone
- so you work out how much to save
- so you can get your money back if something goes wrong.

2

What is a budget?

A record of your income and purchasing allowing you to plan your spendings and understand your restrictions/ limitations.

3

What is bankruptcy?

The state in which you are not capable of repaying your debts.

4

What is the process of bankruptcy?

It is a legal process that releases a person from almost all of their debts. An organisation informs you of when you are bankrupt, a trustee is nominated to manage your financial affair within two weeks of when you lodge your application with them.

5

What is the minimum amount of debt needed to declare bankruptcy?

No minimum

6

How does bankruptcy affect someone?

- Compulsory payments to your trustee
- Potential employment restrictions
- Need consent from trustee to travel overseas
- Permanently appear on National Personal Insolvency Index: a public searchable register
- Your trustee may sell your assets

7

What is liquidation of a company?

The process by which a company's assets are sold and the company is closed or deregistered. All assets of the company are sold and the proceeds go to pay as many creditors as possible.

8

What is an insolvent company?

One that is unable to pay its debts when they fall due for payment.

9

Define solvent company

Able to pay its debts when they fall due

10

Why do companies go into liquidation

Voluntarily to free up funds to pay debts
Involuntarily as a company cannot pay off debts

11

Why does one go bankrupt?

Their assets are less than their liabilities (they owe more than they own), or when they can't pay their debts.