Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
My CPA-REGmodule30
Notecards I made from Wiley's 2012 CPA Exam Review
| Question | Answer |
|---|---|
| What is a receivership? | alternative to bankruptcy proceeding, provides for general administration of debtors assets by a court appointee(receiver) |
| What is the purpose of declaring bankruptcy? | protects creditors rights and grants debtor relief from his indebtedness(give fresh start from of previous debt), |
| What are the three types of bankruptcy? | Chapter 7- liquidation (railroads, banks, insurance cant file) Chapter 11-reorganization of debts (stockbrokers, commodity brokers not eligible) Chapter 13-reorganization of debts for INDIVIDUALS |
| Does filing a bankruptcy petition preclude all creditors from pursuing claims (except within bankruptcy court)? What are the educational requirements for filing a bankruptcy petition? Any exceptions? What about special reasons ed requirements for Ch 7/13? | 1.All except paternity/alimony/child support 2.must receive credit counseling from approved agency w/in 180 days prior to filing (need certificate of completion) 3debtors incapacitated, disabled, active duty in military zone 4.attend financial mgmt cou |
| Who can file an involuntary bankruptcy petition? What requirements are there to file? | 1.creditors 2.<12 creditors single creditor may file if undisputed claim for >$14,425 (multiple may combine to reach level), >12 need 3 sign petition undisputed claims over>$14,425, creditors may need post bond indemnify debtor loses contesting petition |
| Is anyone exempt from involuntary bankruptcy? Is bankruptcy allowed for a deceased persons estate? What if bankruptcy has already begun? | 1.Yes persons owing less than 14,425, farmers, charitable organizations 2.No 3.Not stopped |
| What must a voluntary bankruptcy petition debtor prove to show he isn't abusing the bankruptcy code (per bankruptcy abuse/protection act of 2005)? If prove is debtor given relief? | 1.presume abuse unless monthly income exceeds certain dollar limit (may deduct living expenses), if unable to prove may proceed under chapter 13 instead 2.Yes automatically given relief upon filling |
| When could an order for relief be granted in an involuntary bankruptcy proceeding when the petition is contested? | the debtor is generally not paying his debts as they become due, 120 days before filing petition a custodian was appointed or took possession of substantially all property of debtor |
| What generally happens under Chapter 7 bankruptcy proceedings? | take place under federal law. Order of relief is sought, court appoints interim trustee, filing petition automatically stays other legal proceedings against debtors estate -debtor may regain property from interim trustee by filing court approved bond |
| What happens at the first creditors meeting under chapter 7 bankruptcy proceedings? | -debtor gives schedule of assets, locations, and list of creditors -creditors may elect new trustee to replace court appointed one -claims of debtors allowed (contingent/unliquidated are estimated), must file claim w/in 6 months of meeting |
| Who does the trustee represent? What are his rights? Duties? | 1.estate of debtor 2.receive compensation for services based on value of services (not only estate size) 3.collect, liquidate, distribute estate keeping accurate record of all transactions |
| What is thought of as property of the estate? | -property owned by debtor at filing date -property owed to debtor by 3rd parties that can be recovered -property received after following by inheritance, life insurance, property settlement with spouse, income from property (royalty check on book writte |
| How is it decided if the estate will consider property exemptions under state law or the Bankruptcy code? What are some bankruptcy code property exemptions? | 1.Debtor can choose 2. A PORTION of equity in house,car, tool/book of his trade, personal/family/home use item,jewelry, life insurance. ALL social security benefits, unemployment,disability/illness/veteran benefits, alimony/child support,crime victim com |
| What are a trustee's powers? | -take any legal action necessary -employee help(w/court approval) -must w/in 60 days of relief order assume/reject executory contracts made by debtor -set aside liens -set aside transfers made 1yr prior -set aside preferential transfers made 90 days |
| What are the specific legal actions a trustee may use for debtor defense against 3rd parties? In respect to legal started by the debtor? | 1.may utilize any defense available to debtor 2.may continue or cease action for the benefit of the estate |
| Who may a trustee employee for help in carrying out his duties? Do the hired help deserve compensation? Can a trustee hire himself? | -professionals who hold no interest that are adverse to the debtor -right to compensation for reasonable value of services performed (based on amount and complexity of services) -yes if have professional capabilities needed, may be compensated twice now |
| If within sixty days there is no action by the trustee on executory transactions, what is the presumed dealing? Do rejected transactions have a recourse right? Do leases need to be dealt with differently? | 1.deemed rejected 2.yes it is a breach of contract so 3rd party may now become creditor 3.Leases are subject to court approval |
| Under what conditions may a trustee set aside transactions conducted in the prior year? | 1.transfer was made with intent to hinder/delay/defraud any creditor 2.debtor received less than a reasonably equivalent value in exchange and debtor was insolvent or became insolvent as a result |
| What are preferential transfers of property to a creditor that a trustee can set aside (so long as transfer was 90 days before filing)? | preferential transfers are those made for preexisting debts that enable creditor receive more than would have under a chapter 7 preceding (debtor can't give preferential treatment to a creditor before filing) |
| A trustee conducts a preferential transfer to an insider. Must the trustee still abide by the 90 day rule to set aside this transfer? | No if to an insider (blood relative, officer/director/controlling stockholder) may set aside any transfer done in previous YEAR before filing |
| What are the exceptions to a trustee's ability to set aside preferential transfers? | -Contemporaneous(PV) exchange where debtor receives new value -transfer made in ordinary course of business -security interest given by debtor to acquire property (perfected w/in 10 days) -consumer debts < 600 -Business debts < 5,850 |
| When the bankruptcy trustee sets aside a transaction, what occurs? Can a trustee sue on behalf of an estate? Be sued? | 1.both parties are placed back in their original positions 2.Yes 3.Yes |
| When a person making a claim(claimant) has a property right is it still part of a debtors estate? What is reclamation? a trust claim? secured claim? | 1.no property is turned over to claimant (not considered part of estate) 2.claim by person saying specific property is theirs 3.made by beneficiary for trust property when trustee is bankrupt 4.creditor has a security interest (must be without defects) |
| When should all claims in bankruptcy be filed? | Within 6 months after first creditors meeting |
| What claims are not allowed if an objection is made? | unenforceable claims, unmatured(on filing date)interest, claims that may offset, property tax claim excess of property value, insider/attorney claims excess of reasonable value(court determined), alimony/maintenance/support after filing(not dischargeable) |
| What is the priority of claims? IMPORTANT. | -Secured creditors(supersede bankruptcy trustees interest, satisfied first then see if any assets are left over for bankruptcy estate) -unsecured creditors(each level paid in full then move lower, can't pay in full then prorate at level, lower get 0) |
| Are secured creditors part of the bankrupt estate? What happens if the collateral is insufficient to pay the claim of the secured and junior secured parties? | 1.Technically no, cause have their collateral thats why paid first 2.secured party receives money from collateral, remaining debt owed treated like general creditor |
| What is the priority order for general creditors? VERY IMPORTANT | -domestic support obligations -administration costs -claims in ordinary business -wage/salary/commission -employee benefit contributions -grain/fish -consumer deposit undelivered good -tax -obligations bank -DUIcarAccidents -creditorsFileTimelyP |
| What are domestic support obligations? Administration costs? (1 and 2 in bankruptcy priority) | 1.child support, alimony 2.fees to accountants, attorneys, trustees, and appraises. Expenses incurred in recovery, preserving, selling, discovering property included in estate. Reasonable fees/salary/wages needed operate business after bankruptcy begins |
| Is there a stipulation to claims arising in ordinary course of business? (3 in bankruptcy priority) Wages/salaries/commission owed to bankrupts employees (NOT OFFICERS)? | 1.Claims happened after bankruptcy petition filed, before order for relief entered 2.include vacation,severance, sick leave. collect up to(over=general claim) $11,725 per employee w/in 180 days bankruptcy petition/business stopped whichever occurred 1st |
| Is there a stipulation attached to contributions to employee benefit plans? (5th bankruptcy priority) Claims on fish/grain? (6) Consumer deposits for undelivered goods? | 1.must owed w/in 180 days petition filled, limited to $11,725 per employee reduced by amount received as wage 2.up to %,775 each individual 3.limited to $2,600 per individual |
| What is included in general (unsecured) creditors bankruptcy priority? (11) What if the claims were filed late? | amounts owed to secured creditors in excess amount for which security sells, amounts owed to priority general creditors that exceed priority amount 2.unsecured claims filed late paid after timely claims |
| What is a discharge of the debtor? Is there a stipulation to for a debtor to be discharged? | 1.release of a debtor from all debts not paid in bankruptcy (no obligations even for debts not paid at all or partially paid) 2.debtor must be adjudged an 'honest debtor', individual (bus orgs no discharged cause assets liquidated, so no longer exist) |
| If someone needs to be discharged of their debts for a second time, is there a time period before that can happen? | Yes, 8 years |
| What are the acts that bar discharge of ALL debts? | Improper actions during bankruptcy(false claims, conceal property, fraudulent transfer, false entries), failure explain lost assets, refuse obey court, remove/destroy property 1yr prior to hinder creditor, tamper w/books, substantial abuse of bankruptcy |
| What are the debts that are not discharged by bankruptcy? | taxes w/in 3yrs filing, loans for payment of federal taxes, unscheduled debts when not listed in bankruptcy, alimony/separate maintenance/child support, liability due to theft/embezzlement, debts from fraud, willful/malicious injuries to person/property |
| What are some additional debts that are not discharged by bankruptcy? | student loans unless show undue hardship(cant pay basic necessities, cosigners must show same), gov fines/penalties imposed last 3 years, claims from prior bankruptcy where debtor waived/denied discharge, liability from operating vehicle while drunk |
| What are still some additional debts that are not discharged by bankruptcy? | consumer debts for luxury goods/cash advances on credit w/in 60 days of filing(avoid loading up on luxury goods), debt from violation of securities laws, pension plans/profit sharing/employee plans, homeowner association/condo/cooperative fees |
| How can a discharge be revoked? | discovered fraud afterwards (must apply 1yr after discharge), acquired rights/title to property of estate and fraudulently failed to report, refused to obey court order or to testify(if no infringe on constitutional rights) |
| What is reaffirmation? How is it enforceable? Can the debtor rescind? | 1.debtor promises to pay debt that will be discharged 2.reaffirmation must take place before discharge granted, be approved by bankruptcy court 3.yes allowed 60 days after (must receive warnings on effects and consumer debt not secured real property) |
| What is the goal of a chapter 11 bankruptcy? who can initiate it? | 1.keep financially troubled business in business by reorganization 2.debtor(voluntarily) or creditors (involuntarily- same requirements as chapter 7) |
| When is a creditors committee appointed? What is a creditors committee? Does one have to be appointed? | 1.after order for relief is entered 2.group of unsecured creditors, essentially functions as trustee -investigate debtors financial affairs, create reorganization plan (if debtor no do w/in 120 days of relief) 3.Not if debtor mgmt capable of continuing |
| What does a reorganization plan allow a business to do? How does one treat the claims? | 1.continue operation of business, extends period of payment of debts as payment comes primarily from future income 2.divide claims into classes of similar claims. All claims in class treated equally |
| Can a reorganization plan provide for creditors to receive stock in place of debt? | Yes preferred shareholders may be converted to common shareholders, common shareholders may forfeit shares of stock -typically claimants receive reduced amounts |
| For a reorganization plan to to be approved, what does it need? | approval of 1/2 creditors in each committee owed at least 2/3 debt in the class, acceptance of stockholders holding at least 2/3 in amount of stock -can be approved in court w/o above two stipulations |
| In reorganization who does fast track help? how? | small businesses (debt less than 2.19 million) by cutting out much of the red tap of bankruptcy proceedings |
| Can a court convert a chapter 11 reorganization into chapter 7 bankruptcy if they believe it to be fairer? | Yes |
| Under a chapter 13 debt adjustment plan, what individuals are eligible? | have regular income, owe unsecured debts less than 360,475, owe secured debts less than 1,081,400 |
| How is a chapter 13 debt adjustment plan filed? What debts does it stay? who has exclusive right to propose a plan? If they dont? Is there a trustee? | 1.debtor (voluntary) only can file 2.all collection and straight bankruptcy proceedings against debtor 3.debtor 4.creditors may force debtor into involuntary proceeding under chapter 7 5.Yes court appointed |
| Who confirms or denies a plan under a chapter 13 bankruptcy filing? can creditors receive less than if it were a chapter 7 proceeding? | 1.court without approval of unsecured creditors 2.No, must be paid in full or have all debtors disposable income committed to plan |
| Under a chapter 13 plan, how are claims organized? What if debts to unsecured creditors are not paid in full? and debtor makes more than the states median annual income? | MAY put claims in classifications must not discriminate unfairly against any designated classes, each claimant in class treated equally 2.plan commit to payments for 3 years 3.plan commit to payments for 5 years |
| What does the bankruptcy abuse prevention and consumer protection act of 2005 do in regards to payment of key employees in chapter 11? consumer debtors trying to receive a second discharge? international bankruptcy proceedings? | 1.imposes limits on payments of severance payor retention bonuses(allowed only if have good faith offers from other businesses) 2.increase to 8 years between in chapter 7 or 11 3.created chapter 15 of bankruptcy code to make more functional |
Created by:
Bsantoro
Popular Accounting sets