These are ACCA F4 English (CL/LW) Corporate and Business Law MCQs for Part-G of the Syllabus “Insolvency law”.

These multiple-choice questions (MCQs) are designed to help ACCA F4 English students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

Students should not attempt these MCQs until they have studied the entire chapter.
All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F4 English (CL/LW) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:	ACCA – Association of Chartered Certified Accountants
Fundamental Level:	Applied Skills
Subject:	Corporate and Business Law
Paper:	F4 English – CL/LW
Chapter:	“Insolvency law – MCQs”
Chapter Number:	27 of the Practice and Exam Kit
Syllabus Area:	G – “Insolvency law”
Questions Type:	CBE MCQs
Exam Section:	Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part G of the Syllabus; “Insolvency law” of ACCA F4 English (CL/LW) Corporate and Business Law Module.

Time

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Result

Students will get their F4 English CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “( select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

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F4 (ENG) - Chapter 27 - Part G - MCQs

Course: ACCA - Association of Chartered Certified Accountants
Subject: F4 (LW/CL) (ENGLISH) - Corporate And Business Law
Syllabus Area: G - Insolvency law
Chapter in Kit: 27 - MTQ Bank 6
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

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1 / 12

Jinx Ltd was formed by two brothers, Son and Lon, who are the company's only shareholders and directors.

The company was very successful and has made good profits in every year of trading. However, recently the two brothers have fallen out over some matters in their personal lives and they are no longer talking to each other. This argument, and the resulting lack of trust between Son and Lon, has made running the company almost impossible and business is suffering a consequence.

Son would like to have the company liquidated and is seeking advice.

REQUIREMENT

Which of the following parties instigates a creditors' voluntary liquidation?

The creditors

The directors

The official receiver

The members

2 / 12

Jinx Ltd was formed by two brothers, Son and Lon, who are the company's only shareholders and directors.

Son would like to have the company liquidated and is seeking advice.

REQUIREMENT

In regards to Jinx Ltd, which of the following statements are True?

An insolvency practitioner would oversee a compulsory liquidation of Jinx Ltd

Son will need the agreement of Lon to instigate a compulsory liquidation

A court is likely to order a just and equitable winding up of Jinx Ltd

Son will need the agreement of Lon to instigate a members' voluntary liquidation

3 / 12

Aspin is the Finance Director of Getz Ltd. The company has recently gone through a severe downturn in its business and has failed to pay some of its creditors. Aspin believes that Getz Ltd may be the subject of a compulsory liquidation order and seeks advice, he is particularly concerned about the effect of a compulsory liquidation on the following matters:

The sale of a company office building that is currently being advertised
A threatened legal action by one of Getz Ltd's suppliers against the company
The company's employees
A number of floating charges that are secured against company inventory

REQUIREMENT

Which TWO of the following are requirements for a successful application for a compulsory liquidation?

Failure to pay the debt or offer reasonable security for it

An oral or written demand for payment of the debt

A debt of £750 or more

A period of at least two weeks following demand for payment

4 / 12

The sale of a company office building that is currently being advertised
A threatened legal action by one of Getz Ltd's suppliers against the company
The company's employees
A number of floating charges that are secured against company inventory

REQUIREMENT

Which of the following is the INCORRECT consequence of a compulsory liquidation on Getz Ltd?

The threatened legal action by the creditor can no longer proceed under any circumstances once compulsory liquidation starts

On commencement of the compulsory liquidation, the floating charges will crystallise

Unless the liquidator decides otherwise, the employees will be dismissed once compulsory liquidation starts

The company will be unable to sell the office building once compulsory liquidation commences

5 / 12

Lazy Days Ltd is a coach tour company. It recently leased a fleet of five brand new 'Executive style' coaches ahead of an anticipated increase in business. The coaches cost a total of £20,000 a month to lease, and on top of this, the business also has to pay its overheads including staff costs – a total of £15,000 per month.

The increase in business did not materialise and Lazy Days is only generating £28,000 of revenue per month.

The coach trips are going out on average 50% full of passengers.

Noelle, the Finance Director is increasingly concerned about the situation and has called a meeting of the board of directors to discuss the matter and the possibility of putting the business into administration.

REQUIREMENT

Which TWO of the following statements concerning administration orders are correct?

Administration orders protect the company from its creditors whilst it is liquidated

Administration orders put an insolvency practitioner in control of the company

Administration orders can be used to realise property in order to make a distribution to creditors

Administration orders are granted by the Registrar of Companies

6 / 12

The increase in business did not materialise and Lazy Days is only generating £28,000 of revenue per month.

The coach trips are going out on average 50% full of passengers.

REQUIREMENT

Which of the following documents Noelle would be required to submit in order to apply for an administration order for Lazy Days Ltd?

Notice in the prescribed form

Latest set of financial statements

Statutory declaration

Statement of insolvency

7 / 12

The increase in business did not materialise and Lazy Days is only generating £28,000 of revenue per month.

The coach trips are going out on average 50% full of passengers.

REQUIREMENT

Would an administration order be granted to Lazy Days Ltd and why?

No – because the company is insolvent

Yes – because the company is making a loss

Yes – providing the company can increase its revenue above its costs

No – administration orders are only granted to plcs

8 / 12

On the advice of his accountant, Mat registered a private limited company, Purge Ltd, to conduct his small manufacturing business. Unfortunately the business did not prove successful and Mat and the other shareholders have decided that it is better to liquidate the company rather than run up any more debts.

The company has assets totaling £15,000 and has the following debts:

Unsecured debts to business creditors £8,000
Wages to due to employees £6,000
Cost of the liquidation £5,000
Company dividend £4,000 declared but not paid

REQUIREMENT

Which type of insolvency procedure is most appropriate to Purge Ltd's situation?

Compulsory liquidation

Creditors' voluntary liquidation

Administration

Members' voluntary liquidation

9 / 12

The company has assets totaling £15,000 and has the following debts:

Unsecured debts to business creditors £8,000
Wages to due to employees £6,000
Cost of the liquidation £5,000
Company dividend £4,000 declared but not paid

REQUIREMENT

On liquidation, in which order will Purge Ltd's debts be repaid?

Dividend (2nd), Costs of liquidation (4th), Business creditors (3rd), Employee wages (1st),

Dividend (4th), Costs of liquidation (1st), Business creditors (3rd), Employee wages (2nd),

Dividend (3rd), Costs of liquidation (1st), Business creditors (2nd), Employee wages (4th),

Dividend (1st), Costs of liquidation (2nd), Business creditors (3rd), Employee wages (4th),

10 / 12

Earl has been employed by Flash Ltd for the past 20 years. During that time he has also invested in the company in the form of shares and debentures. Earl owns 5,000 ordinary shares in Flash Ltd. The shares are of £1 nominal value and are fully paid-up. The debentures, to the value of £5,000, are secured by a fixed charge against the land on which Flash Ltd's factory is built.

In April it was announced that Flash Ltd was insolvent and owed considerable amounts of money to trade creditors. However, the employees did receive half their contracted wages. In Earl's case this amounted to £2,000.

REQUIREMENT

If Flash Ltd is liquidated, which type of creditor would Earl be in respect of the remaining half of his wages?

Secured creditor

Unsecured creditor

Deferred creditor

Preferential creditor

11 / 12

REQUIREMENT

If Flash Ltd is liquidated, how much of the company's debt will Earl be liable to repay?

£10,000 (the debentures only)

None

£12,000 (the shares, debentures and his wages)

£5,000 (the shares only)

12 / 12

REQUIREMENT

Assuming no insolvency proceedings have commenced, which of the following statements is correct in regards to Earl's fixed charge over the land?

Earl may request the just and equitable winding-up of the company

Earl may appoint an administrator of the company without reference to the court

Earl can demand immediate repayment of what he is owed

Earl may appoint a receiver of the land and order its sale

Your score is

F4 (CL – ENG) – Chapter 27 – PART G – CBE MCQs – ACCA