Insolvency is inability to pay debts

Q.  Insolvent means
- Published on 16 May 16

a. A person found guilty under financial fraud
b. Not of sound mind
c. Inability of a person to pay the debts
d. Having no property or lacks ownership of anything

ANSWER: Inability of a person to pay the debts
 
  • Insolvency is the state of being unable to pay the money owed, by a person or company, on time; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.
  • Cash-flow insolvency is when a person or company has enough assets to pay what is owed, but does not have the appropriate form of payment.
  • Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts.

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