Which of the following groups is paid first when a firm liquidates?
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Correct Answer: Option B
Explanation:
Debenture holders are creditors of the company and are generally paid before shareholders when the company is liquidated, subject to the priority of claims and the terms of the debentures. Shareholders are owners of the company and receive payment only after the relevant liabilities to creditors have been settled.
Debenture holders are creditors of the company and are generally paid before shareholders when the company is liquidated, subject to the priority of claims and the terms of the debentures. Shareholders are owners of the company and receive payment only after the relevant liabilities to creditors have been settled.