When is a firm insolvent from an accounting perspective?
A)When the firm is unable to meet its financial obligations in a timely manner
B)When the firm's debt exceeds the value of the firm's equity
C)When the firm has a negative net worth
D)When the firm's revenues cease
E)When the market value of the firm's equity equals zero

Question

Quizplus · Accepted Answer

From an accounting perspective, a firm is considered insolvent when it has a negative net worth, meaning its liabilities exceed its assets.

When Is a Firm Insolvent from an Accounting Perspective