8 & 9

Question 1

What are round amounts a warning sign?

Answer 1

Suggests that the customer is unable to fully settle the bill and is making payments to keep them happy

Question 2

What are investigating accountants?

Answer 2

Help bank customers who are experiencing difficulties (Paid by customer)

Question 3

What is administration?

Answer 3

Legal process by which an official is appointed by court to administer the affairs primary focus is to rescue the company

Question 4

Who pays administrators cost when secured liabilities is greater than value of secured assets?

Answer 4

Secured creditors

Question 5

What are the routes into administration?

Answer 5

• Court - Following petition by any one or more shareholders, board, directors or creditors.
• Out of Court - Company must provide notice of their intention to appoint an administrator to any floating charge holder.

Question 6

Do secured creditors have voting rights in respect of the administrators proposals?

Answer 6

No, unless there is a shortfall in the value of the security

Question 7

With the out of court route for administration, what is the process for appointing an administrator?

Answer 7

Charge holder has 5 business days to appoint their own, if not then the company can proceed to appoint their own.

Question 8

Once an administrator is in office, what must creditors get permission from the court to do?

Answer 8

• Collect his debt/enforce security

- Have the company wound up

Question 9

Where must administrators advertise their appointment?

Answer 9

London Gazette, in one local paper as well as advising the registrar of companies

Question 10

How many weeks after administrators appointment must they issue their statement?

Answer 10

8 weeks

Question 11

How many weeks must the statement be presented to the creditors?

Answer 11

10 weeks

Question 12

What happens if the creditors reject the administrators proposal?

Answer 12

The court can discharge the administration order or make an order it sees fit. (i.e wounding up the company)

Question 13

Which 3 ways can a company have its existence terminated?

Answer 13

Wound up, struck off the register or dissolved by court order (for reconstruction)

Question 14

What must debts exceed for winding up?

Answer 14

£750

Question 15

What is unfair preference?

Answer 15

Preference in favour of one creditor to the detriment of all other creditors

Question 16

What is the primary objective of administration?

Answer 16

To rescue a company s a going concern

Question 17

What is liquidation?

Answer 17

The process by which a company is terminated

Question 18

What is sequestration?

Answer 18

The legal process of bankruptcy for an individual or partnership

Question 19

What is the difference between marketing and selling

Answer 19

Marketing is promoting and selling of products and services while selling is the handing over of something for money

Question 20

When trying to sell a product what should you do?

Answer 20

Sell yourself and the organisation first.

Question 21

The ‘credit crunch’ was caused by?

Answer 21

Combination of Large trade, government actions, investors’ demand for higher returns and banks over borrowing and use of derivatives.

Question 22

When discussing products with a customer, it is good to do what?

Answer 22

Listen, ask questions and discuss products

Question 23

When a customer has financial difficulties what should you do?

Answer 23

Research the course of problem and find common ground solution

Question 24

Mock

What is administration?

Answer 24

The Court appointment of an official to administer the affairs of a company

Question 25

Mock

Where a company puts any part of its property out of reach of its creditors, this is known as:

Answer 25

a gratuitous alienation.

Question 26

Mock

When a customer is in financial difficulties you should?

Answer 26

Identify the root cause of the problem and advise the customer of the next steps