ethics civics MCQ #1255

A director of a limited company may not be liable for wrongful trading if he or she:

ethics civics MCQ #1255

  1. Question 1

    Q1. A director of a limited company may not be liable for wrongful trading if he or she:

    • A) increased the valuation of its inventories to cover any potential shortfall
    • B) brought in some expected sales from next year into the current year
    • C) took every step to minimise the potential loss to creditors
    • D) introduced into the balance sheet an asset based on a valuation of its brands

    Answer: took every step to minimise the potential loss to creditors

    Explanation: A director avoids liability for wrongful trading if they can demonstrate that, upon recognizing insolvency was inevitable, they took every reasonable step to minimize losses to creditors.