Topic 5: Bankruptcy, Inventory Methods, CSR Flashcards
What is the definition of Bankruptcy?
When a business is unable to pay debts as they fall due.
What are the four options an individual facing Bankruptcy have?
- Declaration of Intent to Present a Debtors Petition
- A Debt Agreement
- Personal Insolvency
- Voluntary/Involuntary Bankruptcy
What is the definition of the Declaration of Intent to Present a Debtors Petition?
Submits a debtors petition to the insolvency and Trustee Service Australia (ITSA) in which an unsecured creditor cannot take action to recover the money for 21 days. This gives the debtor time to come to an arrangement with their creditors about repaying the money.
What is the definition of a Debt Agreement?
A contract between a debtor and their creditors that must be accepted by the majority of the creditors in terms of the money owed. May provide that the debtor pays a lump sum.
What is the definition of Personal Insolvency?
A contract between a debtor and their creditors to repay part or all of the amount owing and must be approved by 75% majority.
What is the definition of Voluntary Bankruptcy?
A debtor who is unable to meet the repayments can petition for bankruptcy, once they are, the assets they are not allowed to keep will be seized and sold.
What is the definition of Involuntary Bankruptcy?
Occurs when a creditor applies to a court to have a debtor made bankrupt forcing most assets of the debtor to be sold to repay creditors.
What is the definition of a Periodic Method for Recording Inventory Transactions?
A method of tracking inventory where a business conducts physical inventory counts at regular intervals to determine the quantity of goods on hand. The cost of goods sold and inventory balance are calculated periodically and it does not provide real time info.
What is the definition of a Perpetual Method for Recording Inventory Transactions?
Keeps an exact record of the number of items of each product that the business has on hand at any one time. Inventory and cost of sales are recorded constantly.
What is the definition of Corporate Social Responsibility?
Corporations have a degree of responsibility not only for the economic consequences of their activities, but also for the ethical, social and environmental implications.
What are 3 examples of Corporate Social Responsibility?
- Sponsorship
- Resource conservation
- Taxation responsibility
What are 3 Benefits of Corporate Social Responsibility?
- Attracts investors
- Public image/brand awareness
- Attracts employees/employee retention
What are 3 Costs of Corporate Social Responsibility?
- Costs money/investments
- Costs time and money to train staff
- Difficult to source sustainable inputs
